Have you ever had $100 or even $200 in your wallet only to find at the end of the week you have no idea where it has all gone? It probably happens all the time, right? One of the first steps you need to take to get your personal finances on track and get out of debt is to be aware of where your money is going. Think of it this way $100 a week becomes $5,200 for the year or even if it is $100 a month that is $1,200 a year. That’s a lot of money not to know where it is going and if you are coping with debt it makes it even more important.
Let us take a look at a solution to this problem.
Purchase a small note book and record the purchases you made with the cash in your pocket. That means everything: from lunch to paying a bill. This exercise will help clear the fog that surrounds that missing $100 each week or month. It will help you to focus and learn just what is happening to your money. This way you can gain control over your personal finances and make adjustments as needed.
You need to also record payments from your accounts whether by check or automatic transaction but keep this separate to the actual cash spending from your wallet. It is important to realize that a check payment is also considered cash.
So, what about credit cards? These are actually debt. It is something you owe to the bank or credit-card company and once again it is important to keep a close check on the use of your credit card. Record your transactions daily. Credit cards should not be used like cash — it will cost you in the end.
At least monthly bring all the records together and see just where your money is being spent. This is actually best done weekly, reconciling at the end of the month. You will have a clear picture of how much you spent on groceries, doctor’s bills or even entertainment.
This method will help you to set up a realistic family budget which is another important tool to help you get your personal finances on track and get yourself out of debt. Clear the fog of not knowing what is happening to your finances and take control. You can do it.
