by Laurie Childree

Created on: February 16, 2009   Last Updated: April 18, 2009

Spending money is unavoidable when it comes to paying bills and purchasing the very items we need in order to survive. There are those that have no idea how much they spend and others that account for every cent. Those that know what they spend are better off by far than those that don't. In a time when everyone has some form of credit or another it's highly possible that you're spending more than you bring home. Remember just because you can afford the payments doesn't mean you can afford the item you wish to purchase. There are a number of reasons why it's important to know how much you spend.

*Emergencies Happen

*Savings

*Security

*The Future

Emergencies Happen

Knowing how much you spend comes in handy when an emergency arises. By monitoring spending you know exactly how much money you have on hand each pay period in case an emergency comes up. This figure will help you determine how much you have to save to cover any given emergency to have funds in addition to these to be sure that most emergency situations are covered. While you might like to think that bad things only happen to other people you should keep in mind that strange things happen. For instance recently an area not in a flood zone had flood conditions causing roads to close and people to find themselves with water covering the roofs of their normally dry homes.

Savings

When you know how much you spend it's possible to find ways to reduce spending and save money. Tracking expenses means that you can put a budget together that is realistic and helps you to live within your means. Setting realistic savings goals and finding ways to reduce spending can only be done if you know how much you're spending. There are always ways to reduce spending and create savings there are just times when we have to be more creative than most to find them.

By saving as much as we can we are preparing for emergencies and securing our future. When we cut back our expenses and save half our income we are preparing ourselves for the possibility of losing one of the incomes in a two income home.

Security

Knowing how much you spend can give you a sense of security. The security comes from knowing what you have coming in and going out each month. This allows you to know that your income will cover all expenses and gives you advanced warning to the possibility that it may not as cost rise or income decreases. This advanced warning allows you to plan ahead and alter spending habits. Security is gained when you know that you are prepared for whatever is going to come your way, when you're prepared financially you find that you feel more secure than ever.

The Future

The future is the biggest reason why it's important to know how much you spend. Planning for things such as emergencies, vacations and retirement can only be done if you're aware of how much you spend. The chances are that you won't reduce your spending unless you see a need and planning for the future along with the inflation it's going to bring can be the best reason of all. Thier are few people that don't wish to be comfortable once they retire and face the reality of a fixed income, being prepared means knowing how much you spend now.

Planning for retirement or simply taking care of the family each day requires money to be spent; it doesn't mean that you must spend everything you have at once but it does mean you must be aware of what you spend. Teaching our children to be financially accountable means we have to be financially accountable as well.

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