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Creating an Income and Expense Tracking Document

Choosing Your Time Increments
When you set up your tracking document, you will need to decide whether you will measure time in months, weeks, quarters, or another increment. Because most recurring bills are paid on a monthly basis, it makes sense to use one-month increments in your tracking document. For items that are paid less frequently (for example, if your water bill is quarterly), you can simply enter them in the months they are paid and leave the other months blank.

Choosing Your Page Size
A complete tracking document for an entire year will have 49 columns (1 column to list income sources and expense categories, followed by 4 columns for each month) and enough rows to list all your income, expenses, and totals. If you're using pencil and paper or a word-processing program, you can list 1-3 months per page; in an electronic spreadsheet program, you can list the entire year in one document.

Creating the Header Row and Category Column
In the top row of your tracking document, skip the first column and then divide the remaining 48 columns into groups of 4. You will use these 4 columns for each month: Expected Date, Expected Amount, Actual Date, and Actual Amount. These columns will serve slightly different purposes in the income and expense sections, so create them all, even if you feel you don't need all 4 in one of the sections.

Setting Up the Income Section
When setting up the Income section, consult a calendar to determine how many weeks or pay periods will fall in each month; then make a line for each payment you will receive. For example, if you are paid on the first and third Friday of each month, you'll have two lines per month to record your income. If you are paid every Friday, however, the number of pay periods changes from month to month.

If you are self-employed or your pay is project-based, you're probably rolling your eyes and thinking, "I can't project my income!" Believe me, I feel your pain. You might not be able to plug in a salary figure for the next 12 months, but you can anticipate at least a short distance into the future. Projecting income is one of the inherent challenges of being your own boss.

Laying out your projected income for an entire year won't be an option for you, but anticipating even just a month or two ahead and monitoring how close your Estimated Amount comes to matching your Actual Amount will make your financial life more predictable and less scary.

Make a line for each project you are hired for at the time you accept it and enter the amount it will pay in the month you expect to receive that payment. Don't worry about getting the amount exactly right: Remember that you have a column for Estimated Amount (your best guess right now) and another column for Actual Amount (the amount you enter when you have the payment in hand).

In the Expected Date column for each month, record the date on which you anticipate receiving a payment. If you have a regularly recurring salary or your company issues paychecks on the same day each week, this will be easy: Just consult the calendar. If your pay is project-based, use your judgment and past experience with each client to determine a reasonable date to expect payment – for example, 30 days after invoicing.

In the Expected Amount column, record the payment you anticipate. Again, if you are paid by salary, this will be simple. If you are hourly and work a varying number of hours each week, enter an average amount based on your recent work schedules; then update the figure when you receive your schedule for the upcoming pay period. For project work, enter the amount you will be billing for each project.

In the Actual Date and Actual Amount columns, record the actual figures when they occur. Seeing the estimated versus actual dates and amounts will be informative in the future: You'll be able to see how well you estimate and how predictable your income actually is.

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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.


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