Tracking your finances is critical for various reasons. One of them is helping you gain some insights into your spending habits. For example, is your money going into any investment? Are you spending on recurrent expenditures alone? Tracking your expenses encourages financial discipline in addition to making sure that you cater to all your needs.
The first step in tracking finances is identifying your expenses and income. You have to provide timelines as well. For instance, when are you going to pay rent? On what day of the week do you go shopping? Is there anyone who depends on you for his or her monthly upkeep? Then examine your sources of income to see if they can meet these expenses at the appropriate time.
Here are other ways of tracking finances.
Notebooks and Checkbooks Are Critical
Knowing your expenses and income is an excellent idea, but recording them is a wise move as well. Daily financial journals help you track these expenditures and revenues. Remember, forgetting or overlooking something is possible. Unfortunately, these mistakes lead to significant levels of disruption. Avoid them by noting changes as soon as they occur. Record them in a notebook so you can refer to them later.
Carry this notebook in your purse or briefcase and examine it regularly so that you can avoid impulse buying. Recording your income and purchases is also easy when you have it with you at all times. Checkbooks are also an ideal way of tracking finances. More specifically, they are a permanent record of the amount spent, the recipient, and the transaction date.
Taking Advantage of Spreadsheets
Spreadsheets offer you various advantages when it comes to tracking finances. These advantages include easing the process of editing information. You also have room for analyzing the data including graphical analysis. More importantly, keeping the records and transferring them to other devices is a straightforward process. Additionally, spreadsheet programs are widely available.
In fact, you can open a spreadsheet in Microsoft Excel. Open a workbook if you can and then create sheets for every month, e.g., from January to December. Transfer your financial information from your notebook to these sheets. You can do that at the end of every month. Then compare your expenses to previous months. For example, are your costs stagnant, increasing, or reducing?
Choose and Use a Suitable Mobile Application
Currently, more than 3.8 million apps are available on Google Play Store while the Apple Store has 2 million apps. Some of these apps focus on financial matters exclusively. In fact, a few of them help you track your finances on a monthly or daily basis. Download one of them today so that you can use them wherever you go.
Using a mobile application for tracking finances is an excellent idea because you keep your phone close. You also view it several times a day. In some cases, you make purchases or receive income through it. You also ask for ideas on deals to make or forfeit through it. That means you are already using it for financial purposes. Therefore, finance-tracking applications are an extension of that use.
Tracking your finances helps you when it comes to using your money productively. The most significant step in monitoring your cash is identifying your expenses and sources of income. Another one is recording daily transactions in a notebook and then transferring them to a spreadsheet every month for detailed analysis. Finally, using a mobile application is also an ideal way of recording tracking finances.