How to Practice Money Mindfulness with Expense Tracking
It’s time to get mindful about where your money is going. Mindless spending is an easy trap to fall into, especially when you don’t take the time to track your expenses.
I’ve always been super cheap, but unfortunately, I’m not immune from the occasional mindless purchase. Between take-out pizza, more house plants, and drinks, looking at past purchases often leaves me with buyer’s remorse. So, reflecting on past expenses isn’t exactly my favorite pastime. Honestly, I’d rather pass on knowing how much money I’ve spent in the past month; thanks. But this isn’t a healthy way to manage money. Being aware of your expenses is crucial to taking control of your finances.
Not looking at your money won’t make your expenses go away
According to a National Foundation for Credit Counseling poll, only 2 in 5 U.S. adults track their spending. Seventy-five percent of Americans under 45 years old report financial anxiety, so it’s no surprise that many people avoid reviewing their expenses. This avoidant approach is counterproductive to managing your money. Ignoring the problem can lead to increased stress and health issues. It’s time to bring awareness to your spending habits.
Money tracking can help
Luckily, money tracking is an easy way to start paying attention to how you spend your money. Money tracking is exactly what it sounds like. It involves routinely tracking your expenses so you can understand where your money is going and how much you have left to spend.
Much easier said than done, but with a consistent routine and a good set-up, you’ll be an expense-tracking expert in no time. Not only will tracking your expenses provide you with better insights into your spending, but it will also help reduce financial stress.
So, how do you get started with money tracking?
Gather together all of your expenses
Collect your bank statements, lists of cash expenses, Venmo or PayPal transactions, and anything else. Pro-tip: keep a note on your phone to keep track of any cash you spend. As soon as you make a purchase, add it to the note. It’s easy to lose track of where your cash purchases are going. Reviewing expenses is easy in the Nav.it app. Check out the insights tab, then break it down by month or week.
Sort your recent purchases and group them by subject (e.g., utilities, rent, groceries, restaurants, etc.) The budgeting feature in the Nav.it app can help you quickly sort through your expenses. This will help you see where most of your money is going and improve your mental accounting. You might have heard of the envelope budgeting method, where each envelope represents a category and contains the allotted amount of cash. Like using envelopes, categorizing helps you track how much you’ve spent and how much you have. From here, you can see where there is room for improvement.
Write it down
The Nav.it insights page is a great way to collect all your spending information in one place (did you know you can even add multiple bank accounts?). However, physically writing things down can help us process them more deeply. Skimming over your bank statements is a step in the right direction. But unless you’re taking the time to absorb them, you might not learn much from the exercise. The extra steps of paraphrasing and organizing involved in handwriting lead to a deeper understanding of the information. Consider keeping an expense journal to track where your money is going.
Make it a habit
If you want to be more money mindful, you’ll need to make money tracking a part of your routine. Many people tend to push this to the side. Don’t let that happen. Avoid procrastinating by setting a schedule for yourself that includes the when and where. Why? You’re 91% more likely to succeed when you follow up your goal with a plan of action. The transaction swiping feature in the Nav.it app makes it super simple to incorporate daily money tracking into your routine. If you have time to scroll through Instagram, then you have time to swipe through your transactions too.
This also allows you to connect your emotions to your expenses as you decide whether each transaction makes you feel positive, negative, or neutral. Whether it’s every Sunday or the last day of each month, setting a fixed day will help. Soon enough, money tracking will be a habit and (hopefully) not such a dreaded chore.
Find an accountability buddy
Make money tracking more enjoyable by turning it into a social event. Find a friend or romantic partner to rope into your money tracking routine! Trust me; you’re not the only one avoiding it. This is a great way to discuss your finances if you have a romantic partner—forty-eight percent of Americans living with a partner report arguing over money. Consistent expense tracking will improve how you communicate about finances. Meet up with a friend and go over your own expenses in solidarity. Don’t just talk about meeting up; put it in your calendar as a recurring event and send your friend an invite.
Fast fact: Having an accountability partner increases your odds of achieving your goal to 95%. Routinely meeting with an accountability partner is a great incentive to make expense tracking a habit.
Reflect on it
As you sort through your expenses, try to gain some insights into your spending habits. Are there certain expenses you can cut? You’d probably run into problems with your landlord if you stopped paying rent, but maybe you could swap your cafe purchases for coffee at home. This is also an excellent opportunity to check for any expenses you can cut entirely. Forgot to end your Amazon Prime trial? Here’s your reminder. Nice try Jeff Bezos; money tracking is the end of subscription trial forgetfulness. The key is to identify where you have room to be more money mindful.
Understand your expenses to understand yourself
Are your expenses aligned with your values? If your goal is to save for travel, remember what you’re saving for when you buy take-out for the third time in one week. Maybe trying to live a more eco-conscious lifestyle has led to purchasing more sustainable (read: more expensive) clothing. Think of ways you can save money without losing your values. In the case of sustainable clothing, try thrifting instead. It’ll help you reduce your carbon footprint and your financial one.
Don’t be too hard on yourself
Expense tracking is a time to review past expenses to better inform future actions. You can’t go back in time to un-spend your money. This is guidance for moving forward, not a guilt trip. Also, recognize that obsessively tracking your money isn’t great for you either, so limit yourself to your set day. Remember: this is about being aware of your finances. Part of being money mindful is understanding that not every expense is within your control.
Use this to build a budget and increase money mindfulness
Now that you know where your money is going and have identified some expenses to cut, make a budget. You’ve done all the groundwork already. Now it’s time to make use of your money mindfulness spending insights. Routinely monitoring your expenses will help you stay on track with your budget. It’s also easy to spot any excessive purchases and prevent lifestyle creep. Knowing exactly how much you’ve spent makes it easier to understand when to splurge and when to save.