How to Track My Finances

Whether your trying to tackle a mountain of debt or keep yourself in the black, tracking your finances is the first and foremost thing you need to do. After all, how can you go in the right direction if you don’t even know where you are. Financially that is.

Let me show you how I track my finances. I have tried many different ways, some good and some bad. This is the best way I have found to keep track of my finances.

First off, you need to make sure you can access you bank account and credit card information on line. If you are not set up for this and are unsure how to do this, go to your bank and ask them to explain how this works. You will have much more insight to where your money is going if you can log in any time of day or night to see what your balance is and what charges are listed.

The next step is to try and pay for absolutely everything with either your bank card or your credit card. If you choose the credit card route then make sure you are disciplined and pay your balance every month. There’s no point in tracking your finances just to see them go in the toilet because you started charging everything and end up paying huge interest.

Now sometimes it is not possible to pay for absolutely everything using a bank card or credit card. Most vendors will not let you put a 30 cent banana on your credit card. For these transactions, you will have to hold on to the receipt. Put it in a special place in your wallet or purse. Perhaps even carry a special envelope with you.

Now that everything you buy is either documented on line, or in your special receipt location, you need to put sort this information.

You can purchase some software like Quicken or Microsoft Money, or you can track it yourself with a spreadsheet you create yourself, or purchase one at a much reduced cost. Whatever method you use, you need to separate your different expenses and incomes into different categories. Add up the amount for each category every month. How else are you going to find out that restaurants cost you more than groceries, or that your new car guzzles gas twice as fast as your old one. Separate your categories into sub-categories as well, so that you can see that the reason why your car category was so high this month was because you had a repair (a sub-category), but your gasoline costs were about normal.

Once you do this for a month, you can start comparing month to month totals for each category and eventually, annual totals. This will help you create reasonable budgets based on real numbers and will keep you on track and in the right direction.

Now that I have shown you how I track my finances, you can do the same for yourself. Tweak the method if you have to (everyone is different), but the main thing is to start tracking and you’ll be well on your way to financial freedom and piece of mind.