If you had to, could you list out all your expenses this week purely by memory?

“People need to be much more conscious of what they're spending their money on,” says financial educator Andrew Hallam. In his book, Balance: How to Invest and Spend for Happiness, Health, and Wealth, he strongly recommends tracking each purchase you make.

Let’s expand on this idea and examine some of the top reasons you should be tracking your expenses.

Reason 1: Expense tracking helps you become more financially aware

Try to recall how much you spent on lunch the day before yesterday. Unless you’re already tracking your expenses, you probably can’t answer that, right? Our brains have too many things to remember each day, and the most repetitive and inconsequential items are quickly flushed from our short-term memory.

The act of recording information like expenses puts these memories into long-term storage, so we can let them go without losing the crucial data they contain. As a bonus, studies show that the mere act of recording a piece of information increases the likelihood that you’ll remember it naturally later on.

Reason 2: Knowing where your money is going reduces financial stress

In one survey, nearly 75% of adults report feeling stressed about money at least some of the time, and about 25% of adults have said they experienced extreme stress over money during the previous month. Financial woes may seem like a fact of life, but they do have an impact on mental health.

"Money is a very important component of establishing a secure life," says Norman Anderson, CEO and Executive Vice President of the American Psychological Association. Tracking your monthly expenses is one of the simplest money management strategies, and you can benefit through reduced stress levels and a greater sense of control over your life circumstances.

Reason 3: You can save money if you know where it’s wandering off to

Knowing how we spend our money is the first step in spending less of it on unnecessary expenditures. For example, have you considered whether it is more cost-effective to buy a monthly transport pass than to pay as you go? If you’re buying coffee in cafes every day, would you be better off investing in a home coffee machine?

Tracking expenses lets you reduce or even eliminate spending that you feel is taking up too much of your income, freeing that money up for something more meaningful, including savings.

How to get started

It may be difficult to get into the habit of tracking your income and expenses at first, but luckily there’s an app for that! Fortune City is a gamified app that combines good financial habits with the fun of city management.

Use the app daily to record every transaction as it happens, and each of your expenses will become a building in the app based on the expense category. For example, you might discover a small coffee shop when you track your spending on beverages. This way, you can build good budgeting habits while also having fun and feeling rewarded. You can download Fortune City for free on iOS and Android to get started!

References:

• Why you should track your everyday expenses https://www.evidenceinvestor.com/why-you-should-track-your-everyday-expenses/
• The biggest cause of stress in America today https://www.cbsnews.com/news/the-biggest-cause-of-stress-in-america-today/