You have to control your money instead of letting your money control you. While “just go with the flow ” is not a bad motto to have, it can’t be applied to managing money (at least not if you want to keep it). Puts you in control of your financesĪs Francis Bacon said, “Money is a good servant, but a bad master.” When you are aware of expenses such as food, bills, mortgage payments, entertainment, taxes, and similar expenses, you develop better money management skills.Īpart from better managing your cash flow, reducing your tax liability, and making sure your business runs smoothly, we’ve listed 6 additional reasons why expense tracking is important. If you are a small business owner, tracking your expenditures (office supplies, utilities, salaries, subscriptions, mileage, etc.) helps you run your business smoothly and efficiently. Meticulous expense tracking can bring along a wide range of benefits. 6 Reasons why you should track your expenses Therefore, expenses, whether minor or major, should be noted and tracked to stay on top of our finances and develop better money management skills. Minor expenses only seem harmless because we don’t look at them as a whole, aggregated cost. As with cups of coffee, they seem irrelevant when you look at them separately, but when accumulated they can cause major headaches to the business owners. And perish the thought you drink mocha every morning! Expense tracking for businessesīusinesses are sometimes not aware of the huge amounts of money they give to pay credit card fees and rates (not to mention interest rates and debts due to late payments). Let’s say you purchase a cup of coffee 20 days a month - $2.70 multiplied by 20 is $54 monthly for “just” a cup of coffee now and then. Try it for yourself - the average price for a cup of coffee in the US (without milk and tip) is roughly $2.70. You may think that minor expenses such as getting a bottle of water or a cup of coffee to go seem irrelevant, but when you accumulate all those expenses monthly, the sum you get doesn’t seem irrelevant anymore. Similarly, expense tracking helps you have a clear overview of where your money goes, what expenses you can cut off, and helps you create a good weekly or monthly budget. On this blog, we talk a lot about time tracking and how it helps you become aware of how you spend your time and if you need to implement some changes in your schedule. Posting is the act of “assigning expenses to a specific account” or placing the expenses in the right category.Booking stands for recording the expenditures.In order to avoid budget overspending or even underspending, a distinction between booking and posting processes must be made (we’ll talk more about this in the Categorize your expenses section in this blog post): In a nutshell, expense tracking is a budgeting method for keeping a record of all expenditures throughout a period of time and avoiding getting off-track in your budget. Whether you’re unsure where exactly your paycheck goes (and why it goes so fast) or you are aiming to take the wheel of your business finances, tracking your expenses can come to your rescue. Step 5: Find a suitable tool for expense tracking.Helps you stick to your budget and cut out impulse spending Keeps you focused on your financial goals 6 Reasons why you should track your expenses.
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