In a world where money is essential for survival, it becomes critical to be aware of your finances, both income and output. Where income is usually static and more easily tracked, expenses can be difficult to follow. Here are some ways that people have kept track of their money in the past, as well as some modern strategies.
If you’re a bit old fashioned, you may have a very simple way to track your spending already at your disposal. Though checkbooks are fading from financial fashion, they can still come in handy. For those of you not in the habit of using a checkbook, at the front of the book is a register where you can record your transactions. There are categories for check numbers, amount, a description of the purchase and the date. If you’re not using a check, you can record “deb” for debit card, or come up with little codes of your own.
This does require you to write down your purchases as you make them or soon after, but the effort yields the result of having an updated balance of your account at all times.
The Envelope System
Also a bit old fashioned is the envelope system. This is a physical method of budgeting where you make envelopes with categories such as “food”, “gas”, “entertainment”, etc. and place a certain amount of money in each envelope. You can base this amount on what you’ve spent on these items in the past or on what you can feasibly afford to spend. Once you put that money in the envelope that is all you have to spend on items in that category. When the money is gone, it’s gone. You are done spending for the month.
This method takes a lot of discipline. It may take a few months to perfect exactly how much money goes into each envelope and work out some of the other details. The one downside of this is that carrying cash is becoming less common. The envelope system is not that effective if you enjoy the convenience of debit and credit cards.
Finally, a way you can see your every financial action without having to go to the trouble of writing it down. Most banks today have online account access so that you can view your accounts from home. Some even have budgeting tools and ways to categorize your transactions. You can transfer money between accounts, pay bills, and receive paychecks automatically, so gone are the days of late payments.
The danger of online banking lies in convenience. You are likely to take for granted your account security if everything is taken care of for you. Since you can check your account anytime, you may be tempted to put it off. There is no sense of urgency, and therefore no motivation. If you utilize your bank account online, make sure to get into the habit of checking it regularly so that you can make sure there are no mistakes and so you can keep track of how much money you have left. That money you’re saving from paying your bills late is useless if it goes to overdraft fees.
This is a summary of some of the most commonly accepted budget tracking techniques used up to today. There are many ways that banking and finance have evolved with technology, and a myriad of new products related to personal finance and debt restructuring, so it will be interesting to see how trends change and what the next innovation is.
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Phillip Marks spent 25 years working for community newspapers before recently making the transition to digital media. He enjoys the great outdoors and spending time with his wife, children, and grandchildren.