Staying on top of your finances can be difficult and even discouraging, but for most people this is a necessary evil.Spending more than you earn is a sure way to bury yourself in debt, and not being careful about precisely where your money is going can leave you struggling to pay for necessities like groceries.It's not hard to learn how to keep track of your finances, but it requires a fair amount of time and discipline.The methods below will help you become better with your money.
Step 1: You can create a system.
Consistency is the most important part of keeping track of finances.Regardless of which way you log your transactions, you have to be able to refer back to them easily.Important information like the date, amount spent or gained, and expense category should be included in each entry.Make your recording consistent.You can record transactions as soon as they happen, every time you get home, or once a week.Expense categories can be used to figure out what you spend the most money on.Things like housing, utilities, household expenses, groceries, health care, pets, personal expenses and entertainment are included in these categories.You can choose to be specific or general with your categories.You may want to record expenses as either need or want.Your categorizing is consistent between transactions.
Step 2: A notebook is a must.
Writing a record of each transaction in a notebook is the simplest way to track your finances.By always carrying a notebook, you can know where the money came from.You can transfer the information to a computer spreadsheet at the end of the week or month.You can organize this notebook in many different ways.You can use the notebook for spending.You can record both your income and expenses and how they affect the balance of your checking account if you treat it like a logbook.Some people combine their cash and credit card expenses in a notebook at the end of the month or week.
Step 3: It's a good idea to keep a checkbook.
Recording your transactions in a checkbook is still a simple and reliable way of tracking your finances, even though it may be considered old-fashioned.The recording process involves writing down the amount of the transaction, writing a description of it, and then subtracting it from the account balance.You can see how to balance a checkbook.
Step 4: You can use a computer spreadsheet.
By using a simple spreadsheet on a program like Microsoft excel, you can organize your expenses and create graphs to better understand your spending.Creating a personal budget is a good way to start.The amount, category, and date of each transaction would be included in this.On the first day of each month, list your fixed expenses, like rent and utilities, as an expense, along with your expected income, to create a personal budget.You can add other income as needed throughout the week or month.
Step 5: You should analyze your finances at the end of the month.
Regardless of which method you choose to keep track of each transaction, you will need to combine and analyze your spending at the end of the month.You will be able to see where your money is going and make adjustments if necessary.Determine your expenses and compare them to your income for the month.If you're spending more than you make, you need to identify the source of your overspending and make a change for next month.You can figure out where your money is going by category.You should combine the totals spent in each expense category and compare them to your total expenditures.The percentage of total expenses accounted for by that category can be divided by the sum total of all expenses for the month.You can identify areas where you might be overspending.This information can be used to create a budget for next month.
Step 6: You can use a personal finance app.
There are a lot of personal-finance apps for mobile phones and web browsers that offer services to track, tabulate, and analyze your expenses.The apps offer a range of comprehensiveness, from simply acting as a budget-creation tool to displaying all your assets in one place.Keeping in mind your financial goals and ability to commit to using the app is what you should consider when choosing one.A comprehensive app that pulls in all of your financial information from bank accounts, retirement accounts and other sources is something you may want to consider.They remind you to pay your bills.If you want a simpler app that just keeps track of your expenses and/or your income, award-winning examples include Mint Personal Capital Pocket Expense.The simpler interface of these apps make them less comprehensive than the more comprehensive apps.If you want to use an app to track your finances, but don't feel comfortable handing over your financial information, there are also apps that function as manual-input ledgers and analysis tools.Mvelopes you need a budget are good examples.
Step 7: You can input your information in the app.
If the app requires bank information, you should input it and wait for it to sync with your accounts.If you want to watch the app work its magic, input your own transaction information.You will be guided by the apps during this process.
Step 8: The app has an analysis.
You will get analyses of your spending habits from the apps at regular intervals.If you need to adjust your spending habits, be sure to read these reports.Guidance on how to save money can be provided by some apps.