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Record keeping is important to managing your money. This is one area that gets many people in trouble. They simply couldn’t tell you where all their money went. On Monday they had money in their pocket. On Saturday they go out food shopping, reach in their pocket, and discover there is no more money to pay for the groceries. Without a written account of where the money is coming from and where the money is going it would be difficult to accurately compete one of the basics of money management: the budget.
Real Life Story: I have
met people who gave me some interesting examples of managing their money. Joe
tells me that he simply spends what his wife allots him on a daily basis. He What I have found is that many people undermine their financial success before they even have a chance to get starting with the planning. Accurate accounting of your personal financial situation does not require a college degree and does not have to be an overwhelming task. The following is an easy step by step guide to putting together a thorough record keeping system. For those of you following my system you will have two sets of records. One set is for everything that goes on in your personal life. The other is for everything that is related to your hobby based small business. You will need large envelopes or shoe boxes if you cant afford manilla folders, a notebook if you don’t have access to a computer, a pencil, paper clips or rubber bands, and somewhere to safely store the folders. Every document you get regarding income or any expense will be stored in the appropriate folder. For job related income you will put items such as copies of your W2 and paystubs in the folder marked "Job Related Income 2009". For personal record keeping mark a folder with each of these example labels (use more if applicable to your situation):
Anything that has a piece of paper attached to it (even if you print it out from email) should go in a folder at least for 12 months. You will put every document, notice, invoice copy, and receipt regarding that particular expense in the appropriate folder. If you have to spend money and there is no paperwork you should handwrite yourself a note and add that to the folder. EXAMPLE: "February 12, 2009 - bought football jersey from street vendor for husband’s birthday - $30.00" Every time you place another document in the appropriate file you will use a paperclip to keep that month’s receipts together within the folder. At the end of the year you should have 12 stacks of documents individually held together with clips inside the folder. At the end of each month you will take the month’s documents from each folder and add up the total amount you spent. Keep those notes in your master notebook or spreadsheet. At the end of the year while going through your folders determine if the records are still needed. Gas receipts for your car may not be, but a receipt for your iPod may be since it came with a warranty. Here are some reasons for good record keeping. It allows you to go back and prove you made a payment, that an error was made, or that you are owed compensation. Over time it allows you to determine if you are getting more product or service for less of your money. It allows you to find tax deductible expenses. It gives you an accurate number you can use for writing next year’s budget. You will know where your money came from and where your money went! For more information visit BowmansMoneyCollege. You are invited to join me at LinkedIn! |
doesn’t have to worry about what he does with it. Andy used the ATM machine. He
would check his account balance and
that told him how much had left to spend until
next payday. Rob said he didn’t worry about the money. He would live like a king
as soon as he was paid and had money in his pocket. The pay would run out before
the next payday and he would live like a pauper sometimes skipping meals for
lack of money. 