Tracking Income & Expenses

 

We all want to make wise decisions with our money, but how do we know what we have and where it is going?  It is impossible to properly manage our money unless we track it.  Just as if one were managing a business this same principal should be applied to our home finances as well.  Tracking doesn't just tell us what comes in and what goes out, but it is a great tool for projecting future expenses and figuring out where our money could be better spent.  Having this information also allows us to set realistic budgets that actually work.

 

If you have consumer debt I strongly recommend you get rid of it.  All of it.  Credit card debt, car payments, student loans, all of it.  Gone.  The only debt I am personally comfortable with is a mortgage and monthly living expenses.  Anything else equates to financial wastefulness.  I don't know about you, but I work way too hard to waste my money.  Sometimes debt is unavoidable, but if I do incur any debt I do my best to get rid of it as fast as I possibly can.

 

I like to use an Excel workbook to track my income and expenses.  I create a new one every year and I log everything that comes in and goes out.  I keep a tab that homes my Financial Statement and update it quarterly so I always know my net worth.  One tab keeps my budget, another all of my food and nonfood expenses, another tab for savings & retirement accounts.  I also have pages to track expenses related to vacations, home improvements and gifts & holiday expenses.  I use all of this information in order to project future savings and expenditures.  As such I am able to find ways to increase savings and reduce expenses.  All of this data is very important to me right now to determine when and how I can retire.  My yearly Excel workbooks provide me with a wealth of information.  Without good solid information it would be impossible to know exactly where I stand financially.

 

Presently, at any given time, I know exactly how much money I have and how much money I need to earn in order to pay my bills and buy what I need while preparing for my future..  I am able to set financial goals and meet them.  I am aware and in control of my finances.