Studies show that only 32 percent of American families have a household budget and half of American households live paycheck to paycheck.
If you want to avoid being part of those statistics, one of the most important steps is to start tracking your personal finances. Let’s look at 5 simple things you can do to get started.
1. Use Online Services
One of the easiest ways to track your money is to take advantage of the online services available to you. Your bank, credit card company, insurance company, and various other financial providers likely offer this option.
You can download up-to-the-minute information anytime so you know exactly where you stand.
2. Set Up a Personal Budget
Setting up a budget – and sticking to it – helps you live within your means. Having an idea of how much you can spend on a given category each month will let you plan your spending so it lasts for the entire month.
3. Reconcile Your Accounts Every Month
Make sure you reconcile your accounts every month to look for errors or for areas that you’re spending more than you should be. This includes comparing your spending to your budgeted amounts.
When you pay closer attention to your finances, you’ll start to see patterns. This can help you identify areas that you could save money or that you tend to overspend.
4. Use the Envelope System
If you find it challenging to stick to your budget every month, try using the envelope system of budgeting.
Get an envelope for each of the major categories of spending in your budget. At the beginning of the month, put your budgeted amount of cash in each envelope and use that cash to pay for everything.
When an envelope runs out of money, you know you’ve reached your budget for the month.
If you can’t live entirely on cash, put “vouchers” in the envelopes instead. When you pay for something with a credit card or check, take that amount out of the envelope’s vouchers. Same as with cash, once you’re out of “credit” in an envelope, you can’t spend any more on that category.
5. Be Flexible
The best-laid plans can sometimes go sideways so be flexible with your finances.
Unexpected expenses are bound to pop up. In an ideal world, you’ll have savings available to pay for them. But if that’s not possible, you’ll need to adjust your budget for the month to make it work.
If you don’t have any savings set aside, you might benefit from taking some financial classes about how to save money, such as those offered at www.adviceonly.info, to learn how to build up a “rainy day” fund.
Tracking Your Personal Finances Can Help You Save
You might be wondering where you’ll find the time to track your personal finances this way. It will take some time to make it a habit but you don’t need to spend a lot of hours to do this right.
And the money you’ll save by keeping track of your finances will make it all worthwhile in the long-run.
Was this post helpful? Be sure to check out the rest of our blog for more tips and tricks about managing your finances.