As a society, we’re obsessed with tracking—everything from water intake and sleep to screen time and step counts. But when it comes to our finances, many of us are flying blind. We track so much in our daily lives, yet few can confidently say where their money is going. The key to taking control of your finances, building wealth, and making intentional money moves—track your income and expenses.

Having awareness around and tracking your income and expenses is one of the most important foundational tools in wealth building. Before you can budget, commit to a financial plan, or evaluate if financial goals are achievable, you must first understand your cash flow — the driving force of your financial wellness. Your cash flow has an immediate impact on your ability to pay down debt, invest in your future, and live life to the fullest in the present moment. 

I get it. Spreadsheets aren’t sexy. That said, I’d argue there’s something pretty irresistible about a future where your money provides you with the freedom to take risks and to live out your life exactly as you wish. 

So instead of seeing tracking your income and expenses as an exercise in data entry, visualize your finish line and the reasons WHY you’re going deep in your wealth journey.  

7 Top Reasons to Track Your Income and Expenses

1. Master Your Cash Flow

This might seem basic, but most people do not have a solid grasp on their spending habits. There is minimal intention and minimal control. Without either of those things, it will be very difficult to achieve your short-term and long-term financial goals. Understanding the basics of what is coming in and what is going out of your accounts each month will allow you to be more mindful of your spending and ensure your money is going exactly where you want it to — with more thought and intention.

2. Tailor Your Budget to Your Unique Circumstances

Tracking your income and expenses will allow you to create an aligned budget specific to you. You must first understand how much money you are working with and what you are spending it on. Without those facts and figures, it will be very challenging for you to create a plan for your money that is sustainable going forward. Spend a month or two tracking your current expenses to create a cash flow plan that makes sense for you and that will be both effective, sustainable and flexible.

3.Hold Yourself Financially Accountable

I am a big advocate for creating a budget or roadmap to achieve your financial goals. But without taking the time to track your numbers, how will you hold yourself financially accountable? Tracking your income and expenses is the first step to better understanding your wealth-building style, monitoring your progress, and gaining transparency to see if you are on the right track.

4. Catch Fraudulent Activity

When you take the time to review your expenses, you’ll be able to identify errors or significant changes, fraudulent activity, and false charges on your accounts and respond in a timelier manner to better protect your identity and your assets.

5. Monitor Pricing for Utilities and Bills

Most of us pay our utilities and bills through an automated system. You might not even be looking at these bills on a consistent basis, leaving you scratching your head and wondering, “When did my electric bill double?” Keeping on top of trends in this area could save you tens of hundreds of dollars a year. Stay in the know to better understand your usage, ask the right questions, and know what to reasonably expect.

6. Create a Roadmap for Your Financial Goals

In order to begin taking actionable steps to achieve your goals, you must first understand your current financial situation and the cash flow that can support those goals. The Devil is in the details! Be thorough, identify areas for improvement, create a plan to reach your financial goals, and execute with ruthless efficiency through automation. It’s all about getting a handle on your starting point and automating your cash flow toward your goals.

7. Take Control of Your Financial Future

There is something to be said for having a financially organized life and a deep understanding of your assets, income, and expenses. YOU know your numbers. YOU’re the one in the driver’s seat. YOU make the decisions — informed decisions, with an understanding of how those money moves will impact your financial wellness going forward. When you know your numbers, you’ll stop waiting on the sidelines and start taking confident, decisive action.

Make the Most of Your Money

By tracking your income and expenses, you won’t be left wondering if you’re truly making the most of your money and directing it in an intentional way. Finding the purpose behind your money is the first step to ensuring an amazing life for yourself and the lives of those you care about. 

Feeling inspired to take your financial life to the next level? Read more about working with me to kiss cookie-cutter solutions good-bye and tap into the incredible power of what your money can do for you.

Resources:

Some great cash flow tracking resources that clients have used in the past include Rocket Money, Co-Pilot, Monarch Money.