How to Practice Money Mindfulness with Expense Tracking
by Maddelynn Horn
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’ll admit I have 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 buyers’ 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 a crucial step to taking control of your finances.
Avoiding looking at your money won’t make your expenses go away
According to a poll from National Foundation for Credit Counseling, only 2 in 5 U.S. adults track their spendings. 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. In fact, ignoring the problem can actually 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, I know, 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 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 through 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. Similar to using envelopes, categorizing helps you keep track of 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 of your spending information in one place (did you know you can even add multiple bank accounts?). However, the act of physically writing things down can help us process it more deeply. Skimming over your bank statements is a great step, but unless you’re really taking the time to absorb them, you might not learn much from it. The extra steps of paraphrasing and organizing involved in handwriting lead to a deeper understanding of the information. Consider keeping an expense journal to keep track of where your money is going.
Make it a habit
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 yourself a schedule. Those who follow up goals with an action plan for when and where to complete a task are 91% more likely to succeed. 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, having 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 making it 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). If you have a romantic partner, this is a great way to discuss your finances. Forty-eight percent of Americans living with a partner report arguing over money. Consistent expenses tracking will help 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, put it in your calendar as recurring 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 a great time to check for any expenses that can be cut entirely. Forgot to end your Amazon Prime trial? This is your reminder. Nice try Jeff Bezos, money tracking is the end to forgetting subscription trials.
Understand your expenses to understand yourself
Are your expenses aligned with your values? This is a good opportunity to remind yourself what you’re saving for. If your goal is to save for travel, remind yourself that when you go to 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 cut down on your carbon footprint and your financial one.
Don’t be too hard on yourself
Expense tracking is a time to review past expenses in order 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, keep in mind 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. Not every expense is in your control.
Use this to build a budget
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 spending insights. Routinely monitoring your expenses will help you stay on track with your budget. This is also an easy way to spot any excessive purchases and prevent a lifestyle creep. Knowing exactly how much you’ve spent makes it easier to know when to splurge and when to save.