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Tracking Your Money

Choosing the Gathering Place
After you've learned how to herd every last transaction and get it moving in the right direction, you need to have a destination ready to receive and keep those transactions. There's that ancient behavior again: You can get sheep to come home, but once they do, they need a place to stay.

This destination spot can be anything that is large enough to hold receipts of any size, protected from breezes or pets that might steal your captives away again, and convenient enough that you'll actually use it. Mine is a zippered compartment of my wallet; I've trained myself to put receipts there no matter what. When I'm ready to reconcile my accounts, I retrieve all of my receipts from this spot and key them in to QuickBooks. You have dozens of options besides your wallet: a container in your closet, bathroom, or kitchen (wherever you empty your pockets each day); a zippered bag in your car or purse (anything from a lovely leather case to a simple sandwich bag); or a binder clip used like a money clip to keep them all together. Try any idea that appeals to you, and if it doesn't work, try another!

It's not always easy to snare every single transaction, but with my various ways of making sure I get a receipt and herding it into the holding spot, there aren't very many situations that my system can't handle. This should be your goal as well: Improve your system until you become as close to perfect as any modern-day shepherd can be.

Tracking Cash, With or Without Receipts
There is one thing that can throw a wrench into any expense-tracking system quicker than you can say "miscellaneous": the ATM cash advance.

You can be ultra-disciplined about recording check and credit card purchases, collecting all of your receipts to enter into your system, and categorizing your expenditures so you can see where your money is going, but that cash advance receipt can create a big question mark: You know you took $20 out of the bank, but what did you do with it?

If you don't spend much cash and cash advances don't add up to a significant amount for you each month, you can probably skip this section. If you do want to close this gap, here are some improvements you can make to your system to accommodate cash spending:

  • Ask for receipts for absolutely everything, even fast food. Keep these receipts with all the others you'll be recording in your system.
  • If a receipt is not available for a cash purchase (or if you feel silly asking for one at McDonald's), use the ATM slip from the original cash advance to keep a tally of what you spend it on. If you take out $20, on the back of the ATM slip, jot down where and when you spend that $20.
  • If you use money management software, create an account called Cash, similar to the checking, savings, and credit card accounts already in the system. Record your cash spending here and categorize each expense the same as you would in your other accounts.
If you maintain a Cash account record in your money management program, you don't have to maintain an accurate balance for this account if you don't want to. For some people, "cash" is itself enough of an explanation; they don't feel the need to know what that cash was spent on. For others, particularly those trying to stick to a budget, it's imperative to know exactly where every penny goes. Determine your needs based on your unique situation and categorize in only as much detail as you need. Just remember whether you're tracking cash partially or fully and whether or not the balance in your Cash account is accurate when you run reports.

Tip
If you find that you're consistently spending your cash on only one category, such as lunches and snacks, you can stop recording every penny and simply categorize all your future cash advances under Lunch/Snacks.

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More on: Family Finances

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Reproduced from Organize Your Personal Finances in No Time, by Debbie Stanley, by permission of Pearson Education. Copyright © 2005 by Que Publishing. Please visit Amazon to order your own copy.


August 30, 2014



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