When dealing with your personal finances, there are a lot of numbers to keep track of and keep straight. Amidst what is constantly changing, one value ought to be tracked carefully, and it would be a good idea to have it memorized.

I’m talking about your total monthly expenses. Knowing your total expenses will help you stay on top of your finances and keep you aware of where your money is going. It may be surprising to some, but many people don’t really have a good grasp of where their money is spent and even how much.

Once you track your spending for a while, it may also shock you to find out how much money is spent on frivolous or unnecessary things. $90 a month for this and $50 a month for that doesn’t seem like all that much until you look at the whole picture. You’ll also hopefully find ways that you could reduce some of your spending or at least get more bang for your buck.

Another benefit of knowing your total monthly obligations arises when those unexpected expenses come up. You’ll know the difference between a budgeted expense and the unexpected, and when something new comes up you’ll be able to adjust your other spending accordingly instead of realizing at the end of a month that you don’t have enough to cover everything.

You’ll also want to know what your expenses are because that is the amount of income that you need to replace with investment income in order to become financially free. If you consistently spend about $2,000 a month, then you’ll need to accumulate enough investments that will provide you with this amount of passive income.

Bottom Line: There are many important aspects of personal finance. Even so, make a special effort to know your expenses.

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