What does it mean to track expenses?

Tracking expenses means keeping a record of all the money you spend over a period of time. This practice helps you understand where your money is going, manage your budget, and identify areas where you might be overspending or saving.

Here’s how you might go about it:

1. Record Keeping: Note down every expense, whether it’s a large purchase or a small daily expense. This can be done through a manual ledger, a spreadsheet, or an app designed for personal finance.
2. Categorization: Group your expenses into categories like groceries, transportation, entertainment, and utilities. This makes it easier to see where your money is being allocated.
3. Reviewing: Regularly review your tracked expenses to analyse spending patterns, compare them against your budget, and make adjustments if necessary.
4. Budgeting: Use the information to create or adjust a budget that aligns with your financial goals and ensures you’re living within your means.
5. Planning: Track expenses to help plan for future expenses, save for goals, and avoid unnecessary debt.

Overall, tracking expenses is a key step in financial management that helps you make informed decisions about your money.