photo courtesy of Tracy O

The Art Is Not In Making Money But Keeping It

There is always room for improvement, you know – it’s the biggest room in the house – Louise Liber.
Top 8 Life Hacks aims to improve different life areas such as – health, finance, relationships and self.

Life Hack #3 : Keep Track Of Your Money (Finance)

Huh ! Where did all my money go ?

If you have had this experience even once, you know why keeping track of money is important. And if you haven’t had this experience, trust me, you don’t want to have one

• Why To Track Money

  Tracking money will help you find out where you stand right now. It will give you a black and white picture of how much are you earning, how much are you spending, how are you spending money etc.

  The first few months of tracking money were eye openers for us (me & hubby). We both are dedicated money trackers since the feedback it provides is so powerful. Every month, as we try to find more ways to save money, it is this data which gives us a clear picture of how effective our strategy was. It also gives an early warning if we slip up somewhere.

• Where To Track Money

  • Paper-Pen

    The most basic route of course is paper-pen. List your incoming money on one page and outgoing money on other. The objective is that both totals should match at end of every month. For detailed recordings, ledgers can be used, or paper for each category can be used.

  • Excel

    We use an excel sheet to track everything. The only reason being my hubby can do magic with excel. We record all transactions in detail – what was purchased and where, which category it fits into, which date, credit card or cash, which credit card etc. With help of all this data and using excels sort, filter and formula, we can play with data and find out whatever we want. It’s equivalent to having a software which can generate customized reports as required.

  • Financial Tools
    There are lot of online and offline financial tools (free and paid) available. Following are some links where you can find more about them :
    • Top 21 List Of Financial Software And Application For Efficient Money Management
    • top 25 Web 2.0 Apps for Money, Finance, and Investment
    • Massive Personal Finance Resource List

• How To Track Money

  Forming the habit to record each and every transaction is a bit difficult. Following are three things which helped us a lot :

  • Collect Reciepts

    This ensures that they don’t get lost or forgotten. Depending upon your convenience, you can have one or multiple receipt collectors placed at important places in the house – one in each room or at a central place, in a box or envelope or drawer … whatever works.

  • Record Cash Transactions Immediately

    Sometimes, we don’t get receipts for cash transactions. We tried to remember such transactions and jot them down at night – but there were times we forgot. Later, we tried keeping a small piece of paper and pen handy at all times – but didn’t work out – was too inconvenient. Now we simply add such transactions in mobile under notes section. And delete them after entering into the excel sheet at night.

  • Keep A Fixed Time / Day

    It gets really painful to do all data entry at end of a month. Having a set time every day or a set day every week (whichever works for you) helps a lot. It also ensures that we don’t forget recording transactions – which happened often when we had begun with tracking money.

What is your motivation to track money? And how do you do so? Share in comments.

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