Ask the Expert: 5 Reasons To Love Tracking Your Finances
Our expert series is a great place to pick up tips from the pros, but we were particularly excited about today's expert. We're huge fans of Mint.com, and use it daily to track expenses. One of our editors has cut her grocery bill by about 30 percent, just by tracking what she was spending and realizing she overspent when she was in a hurry. Thanks to Mint, she's planning ahead and saving. Since starting using the app, she's even managed to sock away thousands in a savings account. And this tool is absolutely free!
Having a good plan for your finances is one of the best ways you can save for a down payment, make repairs on your home, or build that backyard patio with a built-in firepit that you've been dreaming of. We asked money expert, Holly Perez of Mint.com, to tell us why she thinks you should love tracking your finances.
1. You can do it at any age.
Money management is important at every age. Whether you’ve just landed your first job or are planning for a major purchase like buying a home or even getting ready to have a baby, it’s important to know where you stand with your money. Getting a grip on money coming in and going out will help you make smart financial choices.
2. It can help you create a budget that works for you.
Good money management starts with understanding your fixed (necessary) and discretionary (fun) expenses, and it’s simple to do. Here’s an easy money exercise to get you started:
- Add up your fixed expenses like rent, car insurance, and utilities.
- Subtract those from your monthly income.
- The money you have left is for discretionary spending such as paying down debt, establishing an emergency fund or spending it on entertainment. Knowing these numbers first can help you budget and plan accordingly. It will help you identify if you are living within your means, and if there are changes you need to make in what and how you spend your money.
3. It can help you stop mindlessly spending.
Knowledge is power when it comes to your money. Tracking your finances helps you identify spending patterns. For instance, going out to lunch every day is a great way to connect with co-workers and unwind, but it can also put a strain on your budget. If you spend $10 on lunch or coffee daily at work, think of what you could do with that extra $2,600 in your pocket on a yearly basis! That money could be put toward a savings account, retirement or those home improvements you’ve been dreaming of.
4. There are tools that make it easy.
Free personal finance tools like Mint take the guesswork out of money management by showing you all of your financial accounts in one place. Mint helps you set financial goals, create budgets and sign up for alerts or notifications such as low balance, unusual spending, and home and mortgage notifications to help you stay on top of your money.
5. You can do it as a couple.
Communicate with your partner. Before you combine any finances, talk about how you feel about money, your financial goals and be honest about any financial burdens you might be carrying like debt. It’s also important to set up periodic “money dates” with your partner so you can check-in on your financial health…together. Mint user Jean Pilus says that when she and her husband joined accounts, they could easily track their savings and spending together. They even set up their first goal as a couple: to save for their wedding! Mint helped them identify where they needed to cut back and they saved over $30,000 in just two years. Finally, don’t forget that while many couples have great success in merging finances, it’s important to establish good credit on your own. Look for opportunities to have bills or credit cards in your name.
Holly Perez is a consumer money expert at Intuit and Mint spokeswoman, a leading money management tool that helps people understand and do more with their money so they can achieve their dreams.
Want more? Read the rest of our expert series here!