When things are going haywire in your financial life and you don’t know where to start, it is easy to think that your first solution is to make more money, but oftentimes, that could dig you further into the pit of bad finances. When you make money, but it vanishes quicker than you can account for it, or you have little funds and are struggling to figure out how to stretch it, the first step towards a solution is diagnosis, even more than getting more money. When you think all is well in your financial life, there could be problems lurking that you didn’t anticipate. After all, you can’t fix problems you don’t know about.
As far as personal finance is concerned, the best way to diagnose your finances is through expense tracking. But what does it mean, really? Tracking your expenses is when you monitor your monthly spending versus income. The most detail-oriented people track every single purchase, both cash and digital, from the ₦50 pure water to the ₦5 million car.
Why People Resist Tracking
Tracking expenses is something that many people resist doing. People find it boring, heavy, and dull because it is a mirror that is held up to their spending habits, and we don’t always like what we see.
Why It’s Psychologically Hard
Every time you log an expense, it feels like someone is watching you. You. That gives you anxiety and makes you feel like you are sweating the small stuff. It makes us feel small, like we are engaging in a poor man’s behavior, and that a rich man would never do this. Logging ₦1200 for transport feels humble. In our head, we want to feel like the kind of person who makes big money moves, not record every last penny.
But in reality, tracking is where every great personal-finance planner starts from, no matter your level of income. Tracking expenses exposes habits we’d rather not admit to, so we often avoid doing so. It exposes addiction, people-pleasing habits through constant lending and “black tax”, and impulse indulgence. It is uncomfortable because it forces you to look at your past self’s decisions, and often that self was impulsive, weak, wasteful, and slightly irresponsible.
Tracking every kobo can feel like restricting your life because you’re acting as Big Brother to your own self. But until you track, the background anxiety of having no idea what’s going on with your money and not having enough will persist. Tracking is like turning on the lights in a dirty room. It’s only after you can see the filth and clutter, you can start to clean it.
But All Is Well With My Finances
Another reason that people might resist tracking their expenses is that they misjudge how good their finances actually are. On the surface, things look good. They are not struggling. They spend all of their salary just in time to get a new salary, or maybe they even save some. Nobody is hunting them down for debt. Life seems good, or so they think.
The thing with tracking anything, not just money, is that the results often surprise us. Tracking shows us the gap between who we think we are and who the numbers actually show we are. We are notoriously bad at self-reporting information about ourselves, a phenomenon called the self-reporting bias. Even if you are right and nothing is really wrong with your finances, why not confirm it with the numbers?
Ask someone how many hours they spend on Instagram or TikTok daily. More often than not, they might say 1-2 hours when it’s really 8 hours in their screen time report. It is human nature to misjudge our behaviour. We tend to attribute better behaviour to ourselves than we actually have. People swear they sleep 7-8 hours every night until the sleep app shows 5 hours. They overestimate how much exercise they do, and underestimate how many calories they eat. The same cognitive bias applies to money.
What we think we remember about our past spending isn’t usually accurate. That’s called the recall bias. Finally, what we think we control is usually overestimated; that’s called the illusion of control bias. “I’m good with money. I don’t need to write it down“. Because of these biases, your internal sense of spending cannot always be trusted. You need an external recording as a reality check for your finances. Your mind lies to you just like it does with screen time and other tasks.
Illusion of control: “I can cut back whenever I want“, “I know how much I roughly spend each month”. That’s the illusion, the belief that you are in control. But money flows like water and leaks in tiny places you don’t notice until you measure. You ignore luck and randomness. You think your budget is okay because you are disciplined, but in reality, it’s because you didn’t have car repairs this month. Or because you were not invited to a wedding where you have to pay ₦30k for aso ebi. Tracking shatters your illusions and shows you the truth.
The Procrastination Problem
Even when people summon the courage to start, they give up after a few weeks or months, telling themselves they will do it later. It’s the same reason that a lot of people avoid looking at their bank statements. It already makes us uncomfortable to look at both debit alerts; how much more digging into the nitty-gritty of how that money disappeared?
The pain of the manual input that comes with having to log every transaction is real. It feels so manual that even when people know the advantages, they procrastinate on doing it.
Why You Should Start Tracking
Knowing why you struggle to track money is half the battle. The other half is knowing the benefits. For finance habits like tracking expenses, savings, budgeting, and investing, it’s not enough to know that you should do it; you need a strong “why” to guide you through the tough times when you struggle to keep up the habit.
Diagnostic Tool
Treat tracking expenses as a tool for investigating what is going on with your money when you have questions about how your money runs out fast or where it is mostly spent. You are not tracking to punish yourself; you are doing it to get the data you need to ease your financial stress. It helps identify the leaks in our own spending, so you can plug them. You might constantly go over budget sometimes, and going over your logged expenses can help you analyze exactly where the issue might be coming from.
For certain expenses, once you start to realize that their prices have gone up over time, you can look for alternative brands or alternative shops to buy that thing. Or you might even explore DIY to reduce costs when possible.
High-income earners might feel like they are exempt, but without systems, the money leaks away. History is full of high earners who end up broke; their problem wasn’t earning a lot of money, it was spending without oversight.
Impulse Spending
Tracking your expenses can also reduce impulse buying, because the mere thought that you’d have to face yourself when logging that expense might be enough to stop you from buying that thing. For instance, if you’re trying to buy a gadget that you don’t need because a new model got released, but remember that you actually have to log this expense, the potential shame alone might stop you. That’s how to use shame for good, instead of letting it prevent you from tracking.
Inner Peace
You can get some inner peace about your finances, because you’re keeping your financial house in order. I know for me that every single time that I track my expenses, I start to get a sense of calm as to how my spending in the last week has been. If you are a reasonable spender, tracking vindicates you and lets you realise that your expenses were not frivolous at all, and that you were in fact careful with your spending.
Extra Spending
Tracking expenses exposes where you have wiggle room for some extra spending. For instance, knowing that outside your fixed expenses like electricity, rent, and monthly feeding, you still have extra money, you can then spend that money guilt-free on other things.
Better Spending
It shows you that some of the tiny, ‘stupid’ expenses like take-out, extra data, junk food, trinkets, could add up to pay for a useful larger expense that you have been putting off. If you have been wanting to pay for a professional course that costs ₦50,000, but put it off because you thought it was too expensive, if you saw that you spent the same ₦50k on frivolous things, you might change your mind about putting it off.
Lifestyle Creep
Lifestyle creep is when your income rises, and you start to spend more. All of a sudden, you start to upgrade your apartment, car, and phone. You buy more expensive hair and vacations without realizing how much of your spending has increased, and disappear into an inflated lifestyle. It is not about penny pinching; it is about making sure your financial spending doesn’t get out of hand.
Planning
Once you know the price of almost everything you pay for over months and years of tracking, you are able to better estimate how much you need for future spending. You can’t guess your way out of this one because when planning, every piece of data is helpful. You learn how much bare minimum you need to survive each month. With this knowledge, you can build an emergency fund. If you don’t track your expenses, it is very hard for you to build an emergency fund because you don’t even know how much you would need to maintain a bare minimum lifestyle.
If you are guessing how much you spend monthly, it is very easy for important expenses to slip through the cracks. Let’s say I know I need rent, feeding, school fees, and electricity every month. If planning without data, you might forget the cooking gas bill or your child’s lesson fees that come up once in three months. Budgeting or retirement planning can be done to a surgical precision.
Tracking helps you achieve your financial goals because you have a clear picture of where you currently are financially. It starts to give you a clear picture of when you can afford to buy property, start a business, and fund big projects.
Better Savings
Tracking is the bedrock of other habits in finance. If you don’t know how much money you need to spend per month, how are you going to know how much you need to save, retire, and invest? Tracking reveals where you are spending too much money that could be saved. It is also the data that feeds the conviction required for true saving (If you haven’t yet, read our post: The Courage to Save).
Value for Business Owners/Freelancers
People who earn irregular incomes will benefit the most from tracking expenses because knowing how much you need monthly will become extremely valuable when you have to plan your income spurts. If, according to your logs, you always spend ₦100,000 per month as a business owner as living expenses. Let’s say you get paid ₦500,000 in profits. Instead of balling, you can earmark that money for the five months of living expenses. Any extra profits that come in from February till May, whether ₦50k, ₦0, or ₦1 million, can be seen as a bonus and put to other use. This better planning prevents panic and improves peace of mind.
Value for Job Earners
When you regularly track commute costs, work attire, and lunch at work, you get an idea of how much having that job costs you. Having this data comes in handy when you have to evaluate a new job, promotion, or job transfer. You will be able to compare the full costs of the new job with your current job and determine if the new job is actually an upgrade, or if the loss of free benefits from the old job (like a staff bus or free lunch) wipes out the higher salary of the newer job.
How To Start Tracking
As with most things that require discipline and make our lives better, the first few days of doing them are routine and unglamorous. But after a few weeks or months, the patterns emerge and the “aha” moment comes. The data starts to reveal truths that were hidden, like, “I spent this much on makeup?”
I recommend starting with pen and paper. A lot of people do not like paper because it feels too manual, yet I recommend it because it builds your experience and creates a direct flow from your brain to your arm, helping you remember what you spent money on.
- Remembering: this is one of the stumbling blocks people face when they start logging. Use narrations when you do online transfers so that it’s easier to remember. Keep your receipts. Cash payments are most at risk for forgetting what you bought, so jot them down quickly in a note app or on a notebook.
- Graduating: As you develop more experience with tracking, you can start using spreadsheets like Excel or Google Sheets, or you can use whatever tracking app you can find. But I do not recommend using any app that requires your bank logins. We are not quite there yet in Nigeria as of 2025; there are too many bad actors. To remove friction with typing, you can try dictating your expenses using dictation apps, then copy and paste the text into digital applications.
- Consistency: Set alarms and reminders for the times you want to track. As a beginner, I recommend that you track daily at first. This might seem excessive, but this is because you might forget things. I personally track my expenses once a week, mostly because I don’t really spend that much. I have a lot of zero-spend days where I don’t spend anything at all, because I’ve optimized most of my buying to once a month, the first Saturday of the month, when I go to the market with my list of monthly groceries, predetermined from tracking by the way. So when I do buy something, I remember what I bought, and so most of my tracking is usually on my buying days.
How Much Should You Track
Should you track down to the dollar every single time? Your tracking intensity should match the stage of life that you are in.
- For beginners, track daily or every three days to reveal blind spots and build awareness.
- For intermediates (1 year of consistent tracking), once you build the habit and know your rhythms, shift to weekly or monthly tracking.
- For veterans or people in crisis and transitions: if you are financially stable, you may stop tracking to the penny, but you still need high-level monitoring of your finances, like your savings rate, total monthly spend, and bank balance. If you are facing job loss, funding a big project, semi-retiring (like me!) or starting retirement, track every penny again until stability is confirmed.
Some people, even when they have their spending in control and their finances in order, choose to track any and every amount spent in order to track inflation and trends over the years. They just like having the data to make decisions like whether to take a new job or move to a new city. But even if you don’t log every single purchase, you will always need some form of tracking.
Calculating the total sum of how much you spend in a month after, say, one year of consistent tracking might be enough. The minute you start to see yourself slip back into older habits and spend consistently higher amounts than usual, you should go back to tracking down to the last kobo.
Even trillion-dollar companies like Apple still have financial statements, track costs, and run audits. They don’t necessarily track how many snacks an employee eats during a business meeting. The key shift is from very detailed tracking to a high-level periodic overview.
Summary
To track your money is to admit that you are accountable to yourself and in charge of your finances. It is important to recognize when you are resistant to doing it and confront why. Tracking expenses provides so many benefits, from diagnosing financial issues to planning your future. Keep these benefits at the forefront of your mind when you catch yourself slipping or procrastinating.
Start today. Not with a complex app, but with pen and paper. Don’t aim for perfection, aim for consistency. Your financial growth is waiting on the other side of that data.