Keeping Track Of Your Personal Finances

November 25, 2015 12:01 am0 commentsViews: 100

By : John J. Stone

money-931423_1280Keeping track of your personal finances is much harder than you think. People who spend more than they earn, fall into debt quickly. When debts and interests start taking over your earnings, bankruptcy is much closer than you think. That’s why tracking your personal finances is so useful. Although it requires certain amount of time and discipline it pays off big time in the end of the month.

This article aims to emphasize the importance of personal finance tracking and guide you through the whole process, step by step. Like most of other finance processes, this can also be done in two different ways, manually or with personal finance tracking applications. Both of these ways come with their pros and cons. When you are tracking personal finances manually, you don’t need to worry about computer and smartphone failures, as well as the security of the financial data you entered. Personal finance apps and desktop software on the other hand serve as your personal accountants and can closely follow your spending, read bar codes, take photos of checks etc.

Manual Method

Step 1: Create a System

Consistency is the most important parameter for running an objective finance track. Writing down spending in the end of the week is simply not good enough. Best way is to make notes about spending right after it occurs or in the end of the day. You can review all the checks and slips, write down all the necessary data and add it to some of the pre-created expense categories. These can be more or less specific and their purpose is to determine main money drains in your everyday life.

Step 2: Choose Your Tracking Tools

There are several different tools that can be used for manual finance tracking.

  • checkbookNotebook- writing down each transaction in your notebook is old, but still very functional way to do finance tracking. You can also save checks and slips for further analysis in the end of the month or a week. You can choose to track all of your expenses, or only cash ones and wait for the credit card bank slip to arrive in the end of the month and count it then.
  • Checkbook- another very old and proven way for finance tracking that includes writing down transaction amounts and subtracting it from your bank account balance. 
  • Excel or Google Spreadsheet- spreadsheet programs are the most modern and functional way of manual finance tracking, mainly because they enable you to use different advanced formulas for calculation your expenses.

Step 3: Later Analysis

No matter which method you will use, further analysis of the collected data is necessary and it can be done on weekly or monthly bases. Most people choose to analyze their personal finance data on the end of the month, since that’s when they collect their earnings and pay their bills. Whatever way you choose, your analyses should determine where most of your money is going and enables you to introduce some changes in your monthly financial plan. Information gathered during this analysis should be used for making a working budget for the future months to come.

Digital Method

Which Digital App to Choose 

There are lots of different digital apps that can be used for personal finance tracking. Other than regular functions, each one of those comes with different special features. One of the ways we can further classify finance tracking apps is by separating free from paid ones and desktop from mobile ones. Mobile apps are much more useful, since they enable you to track your expenses wherever you go. For desktop apps, you need to wait until the end of the day, to sit in front of your computer and insert all the transaction data.

Another approach which is much more thorough, and therefore recommendable is to use different apps for different kinds of expenses. For example, you can use one app for calculating and optimizing your credit card expenses and some other mobile app with scanning options for grocery shopping etc. 

Few Extra Tips 

-          If you want to cut down your expenses always choose bundle billing for larger expenses. Many people use this way of paying for medical expenses, or monthly cable+phone+internet bills. In Australia for example, there is a great thing called School Easy Pay system that provide tailored payment solutions for tuition fees, books, and everything your future college kid needs for learning.

-          Minimize the use of cash, when trying to cut your expenses, it is easier to spend and much harder to track, so use credit and debit cards instead.


John J. Stone spent a better part of his life working as a business consultant. Through years of experience, he became a devout believer in the notion that form should always follow function and that developing the ability to think outside of the box is a prerequisite of being a successful entrepreneur. He is a regular contributor at Bizzmarkblog.


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