How To Track Your Money And Master Your Finances

Image by Jeffrey Betts —

Are you wondering how you never seem to have enough money at the end of the month? You feel like you’re making enough, but still, you’re feeling poor — or worse, you’re broke.

Your friends and family don’t seem to have the same problem? You wonder how the heck they are getting by, even if they’re making less money than your family.

You’ve heard that other people talk about how budgeting has helped them figure things out. You’ve considered trying. But you don’t even know where to start.

Very few of us know how to make a budget by heart and it’s not like most of us get any education about money in school. Like so many others, you turn to a trusted friend for information — the Internet. And you found me.

I will do my best to help you figure this out. A word of warning first, learning to take care of your finances is a journey. You won’t figure it all out in a few minutes reading one blog post. But you’re serious about this, I know because you’re here.

You’ve taken a big step for your family’s financial life now that you’ve decided to start budgeting. Good job!

To answer some of the questions above, even if you didn’t ask them. You know, most people have a budget, even if they don’t know it. It doesn’t have to be a system they’ve written down, but they have a system.

If they didn’t money would go any which way they want and you would wonder where they went at the end of the month. And there you are with a pile of bills that you need to pay.

It All Begins With Tracking

So, making the decision to get on top of your money is easy, but where do you start you might ask? You need to get tracking. No, you’re not going out into the woods trying to find tiny footprints from dollars.

Even though the image of that is a bit too visual, it’s not too far from the truth though. You are going to follow your money. In a way. And you will start with your income.

Track Your Income

For a lot of people, this means jotting down the total salary you and your partner bring in each month. Oh, yeah, when talking about budgets, in most my examples I’m talking monthly budgeting — so you know. You round up the total salaries you have and write it down.

For now, we’ll use pen and paper to get the numbers figured out.

This seems easy enough, right? Let’s complicate it some more. Some people have fluctuating income.

If you do, check how much you made over past months. Say you take the past six months. You add up the salaries from those months to get a total, then you divide by the number of months. So in this example, divide by six.

This will give you an average value that you can use as a guideline for the budget. But, we’re getting ahead of ourselves. Let’s backtrack.

Ok, so you got the salaries written down. Another possible complication you might face. You and your partner do not share the finances. That’s cool too. You only do the things described here, but for each of you. It’s not more work since you already have to get the numbers in either case.

What about possible side income, you might ask? If you’re fortunate enough to have some sort of income on top of your salary, that’s not a problem either. You only add this into the total of your salaries.

Remember, we’re tracking income, not only salary. All the small streams count here.

What Is Net Income

Now we will complicate things a bit more. We will talk about net income, which is what we will be tracking. If you’re not familiar with the term, it’s the money you have left after all necessary deductions.

The deductions can be taxes, social security, and retirement plan payments, for instance. It’s stuff you need to pay. If you, for example, have a salary of $1500 and various deductions take away $500, your net income is $1000.

Sorry if I confused you by not saying that the number you write down is the net income earlier. I should have started with that, right?

Track Your Expenses

Brace yourself — possible bumps in the road ahead. Income is fun to track, it’s always fun to see what you make. Less fun is to see what you spend. But it’s the part that is actually more important than what you bring in.

People who are much wiser than me have said something along the line of: “To be rich you need to increase the gap between how much you make and how much you spend”. I most likely butchered that quote in its original form. So let’s not give credit to anyone for it. In part because I don’t remember who said it.

Anyway, it doesn’t matter. It’s the point of the quote that matters.

The reason you need to track your expenses is to see where you’re using it, obviously. You do this to see if you have any “Oh, my…” moments when you go through the expenses.

Oh, my-moments are eye opening realizations. You might see that you spend way too much on those lovely chocolate bunnies that you love to eat. Or, whatever.

In this step, you need to gather up your receipts, bank statements and credit card statements. We’re going to get tracking. Best bring your magnifying glass too. Nah, strike the last part — unless you need it to read.

It’s not that hard to round up the expenses. You only need to find all the minuses in the statements. Most likely the expense related to the receipts will show up in bank, or credit card statements. You only need to track that expense once then.

The receipts that are interesting are the ones that don’t show in statements. Those are ones that you paid with cash.

So far it sounds easy enough. Let’s think forward a bit since I know what I will suggest in the future when you get to budgeting. When you’re going through the expenses, think categories. Think in big groups like groceries, restaurants, clothes, transportation, family, children, furniture, and so on.

Anything that you can group together in a way that makes sense.

Doing this now will save you time later. This is because you will group your expenses into categories in the budget when you set it up.

One way that I recommend is to color code the expenses. Mark them with different colors for different categories in the statements. It makes it easy to spot later. With the receipts, group them together with paper clips or something.

You’re done with tracking. Phew. Feels good, doesn’t it?

Conclusion And Summary

To get started with a budgeting it’s important to first track your income and expenses. You track income in the form of net income, which means income after necessary deductions.

You track your expenses through bank and credit card statements and receipts.

Tracking is important so that you get an overview of where your money is going. You need to know this to be able to direct them where you want them to go later on, with a budget.

What I write about in this post is only one way of getting the basic stuff for a budget done. Do you have any other ideas that you’ve tried and used that might help other people? Share them in the comments, please!

Let’s Connect

I’m offering a free email mini-course on how to get started with budgeting. If you want to get it, you only need to click this link (or click below). You’ll also get a notice whenever I post something new and interesting on the blog in the future.

Originally published at on July 5, 2017.