How to Improve Your Finances Through Tracking

How can you expect to improve your finances this year if you don’t know where your money is going? Tracking your income and expenses will show you where you really spend your money.

“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.”

– James W. Frick

If you truly want to see what you value in life and where you can make changes, start tracking your spending.

Disclosure: This post may contain affiliate links to the products and services I use.

January Money Challenge

Each month this year I am doing a challenge. For January, I challenge us all to track our money and make changes. You can find more on the challenge and discounts for this month here.

How to Track Your Money

Apps are probably the easiest way to do it, especially if you mainly pay for things with your card or bank account. If you use cash, you need to start collecting all the receipts.

With apps, you connect your bank account or accounts and it is all tracked. You can easily see where you are spending money and what you can cut back on.

Most of us are surprised how much we really spend in certain areas when we do a tracking exercise. Alcohol, eating out, groceries and similar are usually much higher than people budget for or assume.

Track Your Income and Bonuses

Expenses aren’t the only thing you need to track. Keep a record of ALL bonus money to see how abundant your life truly is.

Cash sales for things you sell online, that dinner someone else paid for and other unexpected savings or money that comes your way.

Tracking the money coming in will help you feel wealthier. If you only track your expenses, it will make you feel poor and have a scarcity mindset which is stressful.

Money coming in makes us happy vs money going out usually hurts unless it’s for something really cool. Most of the money going out is for boring expenses though and hard to get excited about.

Changes to Make After Tracking Your Money

After you have tracked your money for a while you will have a clearer picture of your true spending and budget. Sit down and rework it now you know the actual figures.

Go over every expense. Ask yourself how you can cut it back. Start with the areas where you can make the biggest impact.

For example, insurance is usually an immediate saving when you compare and find a better deal. Refinancing the home if you are in a position to do so can save thousands in interest.

Anything you can do to get a quick boost will help with morale as well as your finances. Things that take longer to see an impact such as cutting out the daily coffee can be harder to change.

Live Your Life

The amount of times people say to cut out your daily coffee irritates me. I don’t drink it, so it’s not as if I am going to a cafe multiple times a day spending $4+ each time for a coffee.

However, simply cutting out these little expenses isn’t enough, nor is it how most people want to live life. I am a big believer in creating a life you love and that life is meant to be lived.

While I am working towards FIRE (Financial Independence Retire Early), I am also acutely aware life can end at any time and I want my kids to have great memories. My mother died at 37 years old and while I don’t expect to die in the next year (I am 36), I already had to have surgery for the issues which caused her death.

I spent most of my 30th year paralysed as well, in a great deal of pain. That was a huge wake-up call about the life I want to live.

Decide on the lifestyle you want. If a daily cafe coffee is part of that, that’s ok. Budget it in and enjoy it.

Small Habit Changes to Improve Your Finances

That said, now you’ve tracked your money and can see where you are leaking, it’s time to make some small changes. It’s not enough to simply cut things out. You need to replace those habits and make that money work for you

Transfer the Savings

If you do cut out your daily coffee, set up an automatic transfer to send the money you were spending to your savings.

If you don’t want to cut out the daily coffee, then transfer it every time you want to buy one but don’t. You would have found a way to live without that $4 so you could have the coffee. By transferring it to savings, you are making that money work instead of blowing it elsewhere.

Invest Instead

Take it one step further. Rather than just transferring the money to savings, invest it. Save it up and buy shares or indexed funds in one lump sum when you get to $1,000.

Investing makes your money work even hard for you.

Another option is to salary sacrifice if you aren’t already. Once you have chosen a small habit to change, arrange for that amount to be sent to your superannuation through payroll. It was money you were living without anyway, so make the most of it now.

Do it From Home

Make your coffee at home for significantly less than the cafe. Pop some fakeaway in the freezer. Indian curries such as butter chicken and rice freeze well. Or pizza bases with your favourite toppings. Get an air fryer to make yourself chips (or just do it in the oven).

Everyone knows these options work out cheaper than buying them at cafes and restaurants. With a little prep work, you can resist takeaway when you are super tired.

Teach Your Kids

My kids are 12 and 14. Since the age of 7, they have been taught various meals. We get HelloFresh or Every Plate weekly to help with this. They select the meals they want to cook. Each week they cook 2 meals and on those nights the other one does the dishes. I cook on 2 other nights and one night is our treat night, usually homemade pizza.

Alternate and mix it up or use one after the other to maximise the discounts for you. HelloFresh offers your first box FREE.
EveryPlate has up to $150 off, split across your first 5 boxes with the code THRIFTYEPLATE.
Dinnerly offers up to $144 off. (49% off the first order, then 30% off the next two.)
Marley Spoon offers up to $190 off 4 orders! That’s 53% off your first order, and 20% off your next three.

Doing this makes it so much easier. Waste has been reduced, the kids are learning more about cooking and I spend less time doing it all. This means we are less likely to get takeaway or junk on the way home.

Also teach them to do things around the house to free up more of your time, give them life skills and reduce your stress. Check out 11 life skills I want my kids to have.

Your Money, Your Choice

One of the sayings in our house is “My body, my choice.” This applies to money as well. How you spend your money is up to you. Tracking it will absolutely help you get on top of it all and improve your finances.