Subscribe:Track Your Money
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 
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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.
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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
- Paper-Pen
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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.
- Collect Reciepts
What is your motivation to track money? And how do you do so? Share in comments.
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This is a timely tip. I use a paper system in conjunction with Mint.com to track my finances. It’s amazing how much extra money you can find and save just by being aware of what your money is doing.
Ian´s last blog post..Should Nokia Buy Yahoo?
I go up and down on this one. I am learning that tracking money should be a HIGH priority item.
I agree with Ian – just knowing where your money is going makes you wise with spending – certainly my experience.
I am about to try mint.com. I hear it is incredibly easy!
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Hi Avani: When I was in college I tracked my money religiously and that money stretched to unbelievable limits. Once you know where your money is going you get a lot better at controlling expenditures.
Hi Avani – this is so true. I used to be terrible at tracking my finances and I wound up wasting a lot of money as a result.
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Tracking money is my favorite topic though my wife still hates it. I have been doing that even before I got the job, probably during my college days itself. My intention is very simple: I would like to know at any point of time what it takes to live the current life and what is it gonna take 5 years, 10 years from now and post retirement?
It started with paper-pen work initially. And moved onto Notepad (when I didn’t have an Excel copy), then excel and various other applications.
One of the best excel based income-expense tool can be found at this link. It’s really very good.
http://www.dollarshower.com/downloads/Budget_Planner.xls
I used this for sometime before I switched completely to a small app called ‘Budget 2002′. This was the best $10 investment I have ever made and I am still using it every single day 6 years after its purchase!
http://www.download.com/Budget-2002/3000-2057_4-7963425.html
I prefer Excel -or some other equivalent software- to track personal finances. As Ajith showed, there are many great sheets already made sheets that you can adapt to your needs. Besides you can always adapt them or start from scratch to suit your needs.
The only possible drawback of this strategy? As anything in life you could get obsessed. We are just humans, you know.
I always record the expenses I have whenever I spend money…
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It is so nice of you to discuss the benefits of trecking money.. Thank you for sharing this to me..
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I believe a lot of people who go out to eat don’t mind being ‘decadent’ as it’s only done on special outings. If they could do that and be healthy at the same time, well that’s a double bonus.
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Thank you Avani for amazing tips you have given on how one can manage the finances and save more. I believe I can use the financial tools that you have mentioned here. Tips on how to track money are more than excellent. Keep sharing your valuable ideas!
Thank you for reminding us.A very kind of you.Thank you for the details you’ve shared.