In today’s economy it is essential to for any individual to keep track of a personal budget as well as finances in order to plan ahead for financial success. This is a useful way of tracking your monthly income and expenses in order to paint a clearer picture of your overall financial situation.
Tracking your income is relatively easy. It involves keeping a running total of the money available in your bank account(s) and actively tracking and recording income and expenses. Read on to learn a few simple and effective ways that you can make keeping track of your finances a whole lot simpler.
1. Keep a Written Record of Monthly Expenses
If you want to track your finances, it can be beneficial for you to keep tabs of your monthly expenditures and incomes and track your personal budget the old fashioned way: with a checkbook or a ledger. Keeping a current handwritten count will help you to keep track of the purchases you have made during any given week, and roughly how much money is in your account. It will also allow you to assess the necessary expenses you have incurred and other more frivolous expenses to avoid in the future. While this method is good for a rough count, balancing the books by hand can be confusing for some.
2. Use Software Tools and Applications
There are many online budgeting programs like Quickbooks and Mint that you can use to track your expenses and income in real time via the cloud. Most of the popular programs connect directly to your bank account and provide information automatically and group them based on their algorithms. Also, mpst online programs permit users to import their financial documents like receipts and invoices. This saves you the trouble of having to crunch all those numbers by hand.
3. Set Up Automatic Bill Pay
It is obligatory to pay your monthly household bills, and it is also important to make sure these costs are covered as promptly as possible. Creating an automatic bill pay system through your bank or lender will help to minimize late payment fees and interest. If you cannot make electronic payments of your bills via online banking, whether in paper or digital form, you should make sure to keep your bills organized in one place and allocate a day during the week to pay off your bills. Paying your bills on time will help you to minimize the risk of spending more than you need to.
4. Review Expenses with Online Statements
Most banks allow customers to access and view their account activity via a website or online app. This comes in exceptionally handy in our digital age of communication. With modern technology, your financial information is right at your fingertips. This gives you the ability to track your account balances in real time from anywhere on earth with a mobile device, this eliminates the need to carry around a handwritten record or checkbook, meaning that you have one less item to keep track of when you are out and about.
5. Plan Ahead for Savings
It is important not to budget down to the very last penny, but rather allocate a small portion of your monthly income towards a savings account or even a shoebox full of cash under the bed if that’s what suits you. It is important for long term financial stability that you start saving as soon as possible. While not only does this allow you to prepare for the future, it also offers a buffer of financial protection and a safety net should you fall under economic hardship or have a gap in your income for any reason.
Final Thoughts
While keeping track of personal expenses may be easy, there is always the chance for a margin of error when handling your own finances. Many small businesses and individuals prefer to seek the services of qualified financial advisor who can help them to budget for success.
Do you use automatic online bill pay? How has it affected the way you handle your finances? Do you still keep an old fashioned ledger of income and expense? Leave us a comment and share your best budgeting tips in the comments below.