How to Keep Track of Your Personal Finances

How to Keep Track of Your Personal Finances.

Staying on top of your personal finances can be challenging, tedious, and even discouraging, but for most people this process is a necessary evil. Spending more than you earn is a sure way to bury yourself in debt, and not being careful about precisely where your money is going can leave you struggling to pay for necessities like groceries. Fortunately, learning how to keep track of your personal finances is not difficult, but it does require a fair amount of time and discipline. Following either of the methods below will help you down the path of becoming better with your money.

Method 1 Keeping Track of Your Finances Manually.
1. Create a system. The most important part of keeping track of your finances is consistency. Regardless of which way you choose to log your transactions, you have to be able to refer back to them easily and reliably. Be sure to include important information like the date, amount spent or gained, and expense category with each entry. Also be sure to make your recording consistent. For example, you can record transactions as soon as they happen, every time you get home, or even once a week.
Expense categories are an easy way to figure out what you spend the most money on. These categories may include things like housing, utilities, household expenses, groceries, health care, pets, personal expenses, and entertainment. These categories will of course vary from person to person and you can be as specific or general as you want with your categories. For example, you may simply want to record expenses as either need or wants. The important thing is that your categorizing is consistent between transactions.
2. Keep a notebook. The absolute simplest way of tracking your finances is to write a record of each transaction in a notebook. By always carrying this notebook, you are able to know exactly where every dollar came from and went. At the end of each period (week or month), you can also transfer the information to a computer spreadsheet so that it is more accessible.
You can organize this notebook in several different ways. For simplicity, you may simply choose to use the notebook for spending. Alternately, you can treat it more like a logbook and record both your income and your expenses and how they affect the balance of your checking account. Some people choose to use a notebook to track cash expenses only, combining it with debit and credit card expenses at the end of each month or week.
3. Keep a checkbook. It may be considered old-fashioned, but recording your transactions in a checkbook is still a simple and reliable way of tracking your finances. The recording process involves simply writing down the amount of the transaction, writing a description of the transaction (a good place to write down the category), and then adding or subtracting the amount from account balance. For more information, and a look at balance a checkbook, see how to balance a checkbook
4. Use a computer spreadsheet. By using a simple spreadsheet on a program like Microsoft Excel, you can organize your expenses clearly and even create graphs easily to better understand your spending. They are many specific ways to do this, but a good start might be to create a personal budget. This would be done on a week or monthly basis, and include information like the amount, category, and date for each transaction.
To create a personal budget, start by listing your fixed expenses each month (like rent and utilities) as an expense on the first day of each month, along with your expected income for that month. You can then subtract other expenses or add other incomes as necessary throughout the week or month.
5. Analyze your finances at the end of each month. Regardless of which method you choose to keep track of each transaction, you will need also need some way of combining and analyzing your spending at the end of each month. This will allow you to see where your money is going and allow you to make adjustments for next month if needed.
Start by totaling your expenses and compare the sum to your income for the month. Obviously, if you're spending more than you're making, you'll have to identify the source of your overspending and try to make a change for next month.
To identify where your money is going, you can try totaling your spending by category. That is, you should combine the totals spent in each expense category and compare them either to each other or to your total expenditures. Specifically, you can divide the total of each category by the sum total of all of your expenses for the month to get the percentage of total expenses accounted for by that category. This will allows to you identify areas where you might be overspending.
You can also use this information to create a working budget for next month.

Method 2 Using a Personal Finance Application.
1. Select a personal finance app. There are a multitude of personal-finance apps available both for mobile phones and web browsers that offer services to track, tabulate, and analyze your expenses. These apps also offer a range of comprehensiveness, from simply acting as a budget-creation tool to displaying all your assets in one place. In choosing one, keep in mind your financial goals and ability to commit to using the app.
You may want to choose a comprehensive app that pulls in all of your financial information from bank accounts, retirement accounts, and other sources. These often also track your bills and remind you to pay them. Award-winning examples include:
Mint, Personal Capital, Pocket Expense.
Alternately, you may want a simpler app that just keep track of your expenses and/or your income. These apps also connect to bank, but offer a simpler interface and fewer options than the more comprehensive apps. Good examples include:
Level Money, BillGuard.
Finally, if you want to use an app to track your finances, but don't feel comfortable handing over your financial information (bank passwords and account numbers), there are also apps that function as manual-input ledgers and analysis tools. Good examples include:
Mvelopes, You Need a Budget.
2. Input your information into the app. If the app you have chosen requires bank information, input your information and wait for the app to sync with your accounts. Alternately, input your own transaction information as you spend money and watch the app work its magic. The apps will guide you during this process.
3. Study the app's analysis. At regular intervals, the apps will supply you with analyses of your spending habits. Be sure to actually read these reports and think about adjusting your spending habits if necessary. Some apps will provide guidance on how to save money in certain areas.

Tips.

This article is mainly about keeping track of your expenses and income. For more information about managing your finances and saving money, see how to save money and how to manage your finances.
Try to minimize your use of cash, as it tends to be more difficult to track than debit or credit card expenses.

June 04, 2020

How to Find Great Companies to Invest In

How to Find Great Companies to Invest In.

Smart investors put their money in reputable companies and investigate new companies thoroughly before committing their money. By carefully considering the qualities of the companies you invest in and incorporating your own knowledge of the market, you can make informed decisions in the hopes of choosing stocks of good quality and value. Be aware, however, this is no small task. Mutual fund companies and the like dedicate entire teams of experts whose full-time jobs are to research and understand how to invest in companies. Be sure you have the time and inclination to do this yourself, as well as the willingness to take the risks of doing so.

Method 1 Buying What You Know.
1. Stay within your circle of competence. If you have a field of expertise, you may be best able to identify quality within that area. Experience can provide you with the insights you need to make more informed choices. For example, if you work in retail, you may be better positioned to determine if you should invest in companies like Walmart, Target, or Best Buy, than you are in evaluating the latest bio-tech company.
Having competence in a certain area doesn't have to come from workplace experience. If you're a techie who spends his time buying and reading about the latest gadgets, you can draw on the information you obtain to help you make decisions on how to invest in the technology sector.
2. Focus on a few industries or markets. These can be either your direct area of competence or other areas that you are interested in investing in. The important thing is to realize that you can't keep track of everything going on in the global economy. Large financial institutions have whole departments for doing this so don't think you can do it on your own. Instead, narrow your focus to include only a few key industries or markets.
This doesn't mean you should avoid focusing on individual companies. You should always investigate every company you plan to invest in individually.
3. Stay up to date on news within that industry. Examples of quality sources for this are online finance websites like Bloomberg and the Wall Street Journal. They'll give you up-to-date information on many of the goings-on in various sectors of the economy and the World. Again, focus your energy on a few key areas and become knowledgeable on the happenings in them. Look for things like trends, mergers, acquisitions, relevant legislation changes, and any global events that may affect your chosen market.
4. Plan ahead. Identify a company that you think stands to benefit from some change or trend in the market. Look ahead for when this change will take place and move around your money to prepare to invest in the company. For example, if you think that a new product being released by your favorite tech company is going to be a huge success, you may choose to invest in the company before the rest of the world realizes this and drives up the stock price.

Method 2 Investing in Companies with Competitive Advantages.
1. Understand competitive advantages. There are some companies that manage to be consistently profitable and successful in their industry over many years. These companies have succeeded in building a "moat" around them to keep their competitors away. This distance from their competitors is also known as a competitive advantage. Competitive advantages allow these companies to make money and retain customers more easily than others. In turn, these companies are able to provide greater value and return to their shareholders.
An investment in one of these companies allows you to participate in their competitive advantage. While they may not grow as quickly as smaller companies, they often can be less likely to fail in economic downturns and can provide consistent growth throughout the years to come.
Blue-chip stocks are examples of large, successful companies with competitive advantages. These companies have provided consistent growth or dividends over many years and are listed on large stock indexes.
2. Invest in trusted brands. Think Harley Davidson, Coke, BMW. These are brand names etched in the public mind as the best in their class. These companies can raise their prices on the strength of their brands, resulting in deeper profits.These companies are so well-known and essential that they are unlikely to lose a significant amount of customers to competitors.
3. Find companies with high switching costs. When was the last time you switched banks? Or cell phone providers? These services retain customers because switching between them is more time-consuming than it's worth. Companies that have high switching costs can be expected to hold on to their customers longer than companies that don't.
4. Search for economies of scale. Companies that are able to make products and sell them at much lower prices than their competition automatically attract customers -- lots of them -- as long as quality is not compromised. In a crowded market, this is generally the result of economies of scale, a phenomenon where a large company is able to experience lower production costs solely due to its size. Walmart and and Dell have perfected this concept to a science.
5. Invest in legal monopolies. Some companies are granted legal (if temporary) monopolies by the government. Large pharmaceutical companies and manufacturing companies with patents are able to bring a truly unique product to market. Companies that own copyrights, drilling rights, mining rights, and other forms of protected property are often the sole producer or service provider in their area. Thus, these companies can raise prices without fear of losing customers, resulting in higher profits.
Be sure to check how long the company's patent or usage rights are in effect. Some of these are temporary and when they go, there's a chance the company's profit will go with them.
6. Look for opportunities for easy growth. Some companies are easily scalable. That is, their products or services with the potential to network or add more users over time. Adobe has become the de facto standard in publishing; Microsoft's Excel has done the same in spreadsheets. eBay is a great example of a user network. Each additional user to the network costs the company virtually nothing. The additional revenues that come in as the network expands go straight to the bottom line.
For a more current example, consider Netflix. As a streaming service, they make more money for each subscriber, even as their costs remain virtually the same. That way, as they gain more users they will continue to grow in profitability, assuming they don't choose to increase costs significantly.

Method 3 Evaluating Company Performance and Valuation.
1. Check the quality of management. How competent is the management running the company? More importantly, how focused are they toward the company, customers, investors, and employees? In this age of rampant corporate greed, it's always a great idea to research the management of any company you're thinking of investing in. Newspaper and magazine articles are good places to get this information.
This doesn't just mean that management has provided good financial results recently. Rather, look for indications of other important qualities like responsiveness, adaptability, capacity for innovation, and organizational ability.
2. Watch for management changes. A good leader can successfully turn around a company that many consider to be a lost cause. Watch the news and financial reports for changes in management positions, especially CEOs. If you believe in the new CEO of a company, based on your research, you may choose to invest in that company. Here, you're essentially putting your faith in the person, not the company.
3. Avoid overvalued stocks. Even a great company can be overvalued. Learn to interpret financial statements and pick stocks with fundamental analysis to find companies the market has overvalued. Know that these companies may be some of the most buzzed-about and invested in companies around, but they are still overvalued and may experience drastic declines in price once their day in the spotlight is over.
One way to determine if a stock is overpriced is to examine its price-earnings-ratio. The price to earnings ratio can usually be found in the company's stock summary on financial websites. Generally, PE ratios are between 20-25, but this varies by industry.
To evaluate a company's PE ratio, search online for the average PE ratio in the company's industry. If the P/E ratio is over the industry average, the company could be overpriced in view of its earnings.
4. Buy undervalued stocks. Undervalued stocks are those that are trading at a lower value than their financial information would indicate. These may be companies that have only started to do well recently. In these cases, the market has not yet caught up with their newfound success. To identify stocks with room to grow in value, you can also use the price-earnings ratio mentioned above and look for companies with low PE ratios compared to the industry average.
You can also look for companies with a price-to-book-value of less than 2. The price-to-book ratio is the price of the company divided by the total value of its assets minus its liabilities and intangible assets. A low ratio may indicate that the company is relatively cheap.

FAQ.

Question : How can I know a company's management?
Answer : A company's stock prospectus will list its management personnel. For suggestions on researching company management, go here: Investopedia.com/articles/02/062602.asp.

Tips.
Start thinking about everyday companies in terms of this new framework.
Learn the basics of reading financial statements. Check the profitability of companies you're interested in. Check their debt position. See if they have been growing steadily.
Visit the company’s website and other financial websites that will give you insight into the stock.
While it may be advantageous to invest in companies you know, do not limit yourself to just one or two sectors of the economy. Try to research companies in a variety of sectors. Doing so further diversifies your portfolio to better insulate it from a downturn in a single sector or company.

Warnings.
Be aware of stock tips: Whether they come from someone you see on TV or someone you meet in person, these are more often not well-researched or are even based on someone's grandiose theory about getting rich quick. They may also be provided by salesmen paid to inflate a stock's price to allow a company to raise as much capital as possible.
Jumping into buying stocks in a company without doing thorough research can be a quick way to lose your money.
Investing always carries risk. Even if you do everything right, there's no guarantee that you'll make money.

April 07, 2020

How to Keep Track of Your Personal Finances

How to Keep Track of Your Personal Finances.

Staying on top of your personal finances can be challenging, tedious, and even discouraging, but for most people this process is a necessary evil. Spending more than you earn is a sure way to bury yourself in debt, and not being careful about precisely where your money is going can leave you struggling to pay for necessities like groceries. Fortunately, learning how to keep track of your personal finances is not difficult, but it does require a fair amount of time and discipline. Following either of the methods below will help you down the path of becoming better with your money.



Method 1 Keeping Track of Your Finances Manually.

1. Create a system. The most important part of keeping track of your finances is consistency. Regardless of which way you choose to log your transactions, you have to be able to refer back to them easily and reliably. Be sure to include important information like the date, amount spent or gained, and expense category with each entry. Also be sure to make your recording consistent. For example, you can record transactions as soon as they happen, every time you get home, or even once a week.

Expense categories are an easy way to figure out what you spend the most money on. These categories may include things like housing, utilities, household expenses, groceries, health care, pets, personal expenses, and entertainment. These categories will of course vary from person to person and you can be as specific or general as you want with your categories. For example, you may simply want to record expenses as either need or wants. The important thing is that your categorizing is consistent between transactions.

2. Keep a notebook. The absolute simplest way of tracking your finances is to write a record of each transaction in a notebook. By always carrying this notebook, you are able to know exactly where every dollar came from and went. At the end of each period (week or month), you can also transfer the information to a computer spreadsheet so that it is more accessible.

You can organize this notebook in several different ways. For simplicity, you may simply choose to use the notebook for spending. Alternately, you can treat it more like a logbook and record both your income and your expenses and how they affect the balance of your checking account. Some people choose to use a notebook to track cash expenses only, combining it with debit and credit card expenses at the end of each month or week.

3. Keep a checkbook. It may be considered old-fashioned, but recording your transactions in a checkbook is still a simple and reliable way of tracking your finances. The recording process involves simply writing down the amount of the transaction, writing a description of the transaction (a good place to write down the category), and then adding or subtracting the amount from account balance. For more information, and a look at balance a checkbook, see how to balance a checkbook

4. Use a computer spreadsheet. By using a simple spreadsheet on a program like Microsoft Excel, you can organize your expenses clearly and even create graphs easily to better understand your spending. They are many specific ways to do this, but a good start might be to create a personal budget. This would be done on a week or monthly basis, and include information like the amount, category, and date for each transaction.

To create a personal budget, start by listing your fixed expenses each month (like rent and utilities) as an expense on the first day of each month, along with your expected income for that month. You can then subtract other expenses or add other incomes as necessary throughout the week or month.

5. Analyze your finances at the end of each month. Regardless of which method you choose to keep track of each transaction, you will need also need some way of combining and analyzing your spending at the end of each month. This will allow you to see where your money is going and allow you to make adjustments for next month if needed.

Start by totaling your expenses and compare the sum to your income for the month. Obviously, if you're spending more than you're making, you'll have to identify the source of your overspending and try to make a change for next month.

To identify where your money is going, you can try totaling your spending by category. That is, you should combine the totals spent in each expense category and compare them either to each other or to your total expenditures. Specifically, you can divide the total of each category by the sum total of all of your expenses for the month to get the percentage of total expenses accounted for by that category. This will allows to you identify areas where you might be overspending.

You can also use this information to create a working budget for next month.



Method  2 Using a Personal Finance Application.

1. Select a personal finance app. There are a multitude of personal-finance apps available both for mobile phones and web browsers that offer services to track, tabulate, and analyze your expenses. These apps also offer a range of comprehensiveness, from simply acting as a budget-creation tool to displaying all your assets in one place. In choosing one, keep in mind your financial goals and ability to commit to using the app.

You may want to choose a comprehensive app that pulls in all of your financial information from bank accounts, retirement accounts, and other sources. These often also track your bills and remind you to pay them. Award-winning examples include:

Mint, Personal Capital, Pocket Expense.

Alternately, you may want a simpler app that just keep track of your expenses and/or your income. These apps also connect to bank, but offer a simpler interface and fewer options than the more comprehensive apps. Good examples include:

Level Money, BillGuard,

Finally, if you want to use an app to track your finances, but don't feel comfortable handing over your financial information (bank passwords and account numbers), there are also apps that function as manual-input ledgers and analysis tools. Good examples include:

Mvelopes, You Need a Budget.

2. Input your information into the app. If the app you have chosen requires bank information, input your information and wait for the app to sync with your accounts. Alternately, input your own transaction information as you spend money and watch the app work its magic. The apps will guide you during this process.

3. Study the app's analysis. At regular intervals, the apps will supply you with analyses of your spending habits. Be sure to actually read these reports and think about adjusting your spending habits if necessary. Some apps will provide guidance on how to save money in certain areas.



Tips.

This article is mainly about keeping track of your expenses and income. For more information about managing your finances and saving money, see how to save money and how to manage your finances.

Try to minimize your use of cash, as it tends to be more difficult to track than debit or credit card expenses

February 10, 2020

how to keep track of your personal finances

How to Keep Track of Your Personal Finances.

Staying on top of your personal finances can be challenging, tedious, and even discouraging, but for most people this process is a necessary evil. Spending more than you earn is a sure way to bury yourself in debt, and not being careful about precisely where your money is going can leave you struggling to pay for necessities like groceries. Fortunately, learning how to keep track of your personal finances is not difficult, but it does require a fair amount of time and discipline. Following either of the methods below will help you down the path of becoming better with your money.



Method 1 Keeping Track of Your Finances Manually.

1. Create a system. The most important part of keeping track of your finances is consistency. Regardless of which way you choose to log your transactions, you have to be able to refer back to them easily and reliably. Be sure to include important information like the date, amount spent or gained, and expense category with each entry. Also be sure to make your recording consistent. For example, you can record transactions as soon as they happen, every time you get home, or even once a week.

Expense categories are an easy way to figure out what you spend the most money on. These categories may include things like housing, utilities, household expenses, groceries, health care, pets, personal expenses, and entertainment. These categories will of course vary from person to person and you can be as specific or general as you want with your categories. For example, you may simply want to record expenses as either need or wants. The important thing is that your categorizing is consistent between transactions.

2. Keep a notebook. The absolute simplest way of tracking your finances is to write a record of each transaction in a notebook. By always carrying this notebook, you are able to know exactly where every dollar came from and went. At the end of each period (week or month), you can also transfer the information to a computer spreadsheet so that it is more accessible.

You can organize this notebook in several different ways. For simplicity, you may simply choose to use the notebook for spending. Alternately, you can treat it more like a logbook and record both your income and your expenses and how they affect the balance of your checking account. Some people choose to use a notebook to track cash expenses only, combining it with debit and credit card expenses at the end of each month or week.

3. Keep a checkbook. It may be considered old-fashioned, but recording your transactions in a checkbook is still a simple and reliable way of tracking your finances. The recording process involves simply writing down the amount of the transaction, writing a description of the transaction (a good place to write down the category), and then adding or subtracting the amount from account balance. For more information, and a look at balance a checkbook, see how to balance a checkbook

4. Use a computer spreadsheet. By using a simple spreadsheet on a program like Microsoft Excel, you can organize your expenses clearly and even create graphs easily to better understand your spending. They are many specific ways to do this, but a good start might be to create a personal budget. This would be done on a week or monthly basis, and include information like the amount, category, and date for each transaction.

To create a personal budget, start by listing your fixed expenses each month (like rent and utilities) as an expense on the first day of each month, along with your expected income for that month. You can then subtract other expenses or add other incomes as necessary throughout the week or month.

5. Analyze your finances at the end of each month. Regardless of which method you choose to keep track of each transaction, you will need also need some way of combining and analyzing your spending at the end of each month. This will allow you to see where your money is going and allow you to make adjustments for next month if needed.

Start by totaling your expenses and compare the sum to your income for the month. Obviously, if you're spending more than you're making, you'll have to identify the source of your overspending and try to make a change for next month.

To identify where your money is going, you can try totaling your spending by category. That is, you should combine the totals spent in each expense category and compare them either to each other or to your total expenditures. Specifically, you can divide the total of each category by the sum total of all of your expenses for the month to get the percentage of total expenses accounted for by that category. This will allows to you identify areas where you might be overspending.

You can also use this information to create a working budget for next month.



Method  2 Using a Personal Finance Application.

1. Select a personal finance app. There are a multitude of personal-finance apps available both for mobile phones and web browsers that offer services to track, tabulate, and analyze your expenses. These apps also offer a range of comprehensiveness, from simply acting as a budget-creation tool to displaying all your assets in one place. In choosing one, keep in mind your financial goals and ability to commit to using the app.

You may want to choose a comprehensive app that pulls in all of your financial information from bank accounts, retirement accounts, and other sources. These often also track your bills and remind you to pay them. Award-winning examples include:

Mint, Personal Capital, Pocket Expense.

Alternately, you may want a simpler app that just keep track of your expenses and/or your income. These apps also connect to bank, but offer a simpler interface and fewer options than the more comprehensive apps. Good examples include:

Level Money, BillGuard,

Finally, if you want to use an app to track your finances, but don't feel comfortable handing over your financial information (bank passwords and account numbers), there are also apps that function as manual-input ledgers and analysis tools. Good examples include:

Mvelopes, You Need a Budget.

2. Input your information into the app. If the app you have chosen requires bank information, input your information and wait for the app to sync with your accounts. Alternately, input your own transaction information as you spend money and watch the app work its magic. The apps will guide you during this process.

3. Study the app's analysis. At regular intervals, the apps will supply you with analyses of your spending habits. Be sure to actually read these reports and think about adjusting your spending habits if necessary. Some apps will provide guidance on how to save money in certain areas.



Tips.

This article is mainly about keeping track of your expenses and income. For more information about managing your finances and saving money, see how to save money and how to manage your finances.

Try to minimize your use of cash, as it tends to be more difficult to track than debit or credit card expenses

February 09, 2020

How to Keep Track of Your Personal Finances

How to Keep Track of Your Personal Finances.

Staying on top of your personal finances can be challenging, tedious, and even discouraging, but for most people this process is a necessary evil. Spending more than you earn is a sure way to bury yourself in debt, and not being careful about precisely where your money is going can leave you struggling to pay for necessities like groceries. Fortunately, learning how to keep track of your personal finances is not difficult, but it does require a fair amount of time and discipline. Following either of the methods below will help you down the path of becoming better with your money.

Method 1 Keeping Track of Your Finances Manually.

1. Create a system. The most important part of keeping track of your finances is consistency. Regardless of which way you choose to log your transactions, you have to be able to refer back to them easily and reliably. Be sure to include important information like the date, amount spent or gained, and expense category with each entry. Also be sure to make your recording consistent. For example, you can record transactions as soon as they happen, every time you get home, or even once a week.

Expense categories are an easy way to figure out what you spend the most money on. These categories may include things like housing, utilities, household expenses, groceries, health care, pets, personal expenses, and entertainment. These categories will of course vary from person to person and you can be as specific or general as you want with your categories. For example, you may simply want to record expenses as either need or wants. The important thing is that your categorizing is consistent between transactions.

2. Keep a notebook. The absolute simplest way of tracking your finances is to write a record of each transaction in a notebook. By always carrying this notebook, you are able to know exactly where every dollar came from and went. At the end of each period (week or month), you can also transfer the information to a computer spreadsheet so that it is more accessible.

You can organize this notebook in several different ways. For simplicity, you may simply choose to use the notebook for spending. Alternately, you can treat it more like a logbook and record both your income and your expenses and how they affect the balance of your checking account. Some people choose to use a notebook to track cash expenses only, combining it with debit and credit card expenses at the end of each month or week.

3. Keep a checkbook. It may be considered old-fashioned, but recording your transactions in a checkbook is still a simple and reliable way of tracking your finances. The recording process involves simply writing down the amount of the transaction, writing a description of the transaction (a good place to write down the category), and then adding or subtracting the amount from account balance. For more information, and a look at balance a checkbook, see how to balance a checkbook

4. Use a computer spreadsheet. By using a simple spreadsheet on a program like Microsoft Excel, you can organize your expenses clearly and even create graphs easily to better understand your spending. They are many specific ways to do this, but a good start might be to create a personal budget. This would be done on a week or monthly basis, and include information like the amount, category, and date for each transaction.

To create a personal budget, start by listing your fixed expenses each month (like rent and utilities) as an expense on the first day of each month, along with your expected income for that month. You can then subtract other expenses or add other incomes as necessary throughout the week or month.

5. Analyze your finances at the end of each month. Regardless of which method you choose to keep track of each transaction, you will need also need some way of combining and analyzing your spending at the end of each month. This will allow you to see where your money is going and allow you to make adjustments for next month if needed.

Start by totaling your expenses and compare the sum to your income for the month. Obviously, if you're spending more than you're making, you'll have to identify the source of your overspending and try to make a change for next month.

To identify where your money is going, you can try totaling your spending by category. That is, you should combine the totals spent in each expense category and compare them either to each other or to your total expenditures. Specifically, you can divide the total of each category by the sum total of all of your expenses for the month to get the percentage of total expenses accounted for by that category. This will allows to you identify areas where you might be overspending.

You can also use this information to create a working budget for next month.

Method 2 Using a Personal Finance Application.

1. Select a personal finance app. There are a multitude of personal-finance apps available both for mobile phones and web browsers that offer services to track, tabulate, and analyze your expenses. These apps also offer a range of comprehensiveness, from simply acting as a budget-creation tool to displaying all your assets in one place. In choosing one, keep in mind your financial goals and ability to commit to using the app.

You may want to choose a comprehensive app that pulls in all of your financial information from bank accounts, retirement accounts, and other sources. These often also track your bills and remind you to pay them. Award-winning examples include:

Mint, Personal Capital, Pocket Expense.

Alternately, you may want a simpler app that just keep track of your expenses and/or your income. These apps also connect to bank, but offer a simpler interface and fewer options than the more comprehensive apps. Good examples include:

Level Money, BillGuard.

Finally, if you want to use an app to track your finances, but don't feel comfortable handing over your financial information (bank passwords and account numbers), there are also apps that function as manual-input ledgers and analysis tools. Good examples include: Mvelopes, You Need a Budget.

2. Input your information into the app. If the app you have chosen requires bank information, input your information and wait for the app to sync with your accounts. Alternately, input your own transaction information as you spend money and watch the app work its magic. The apps will guide you during this process.

3. Study the app's analysis. At regular intervals, the apps will supply you with analyses of your spending habits. Be sure to actually read these reports and think about adjusting your spending habits if necessary. Some apps will provide guidance on how to save money in certain areas.

Tips.

This article is mainly about keeping track of your expenses and income. For more information about managing your finances and saving money, see how to save money and how to manage your finances.

Try to minimize your use of cash, as it tends to be more difficult to track than debit or credit card expenses.

January 14, 2020

how to keep track of your personal finances

How to Keep Track of Your Personal Finances.

Staying on top of your personal finances can be challenging, tedious, and even discouraging, but for most people this process is a necessary evil. Spending more than you earn is a sure way to bury yourself in debt, and not being careful about precisely where your money is going can leave you struggling to pay for necessities like groceries. Fortunately, learning how to keep track of your personal finances is not difficult, but it does require a fair amount of time and discipline. Following either of the methods below will help you down the path of becoming better with your money.

Method 1 Keeping Track of Your Finances Manually.

1. Create a system. The most important part of keeping track of your finances is consistency. Regardless of which way you choose to log your transactions, you have to be able to refer back to them easily and reliably. Be sure to include important information like the date, amount spent or gained, and expense category with each entry. Also be sure to make your recording consistent. For example, you can record transactions as soon as they happen, every time you get home, or even once a week.

Expense categories are an easy way to figure out what you spend the most money on. These categories may include things like housing, utilities, household expenses, groceries, health care, pets, personal expenses, and entertainment. These categories will of course vary from person to person and you can be as specific or general as you want with your categories. For example, you may simply want to record expenses as either need or wants. The important thing is that your categorizing is consistent between transactions.

2. Keep a notebook. The absolute simplest way of tracking your finances is to write a record of each transaction in a notebook. By always carrying this notebook, you are able to know exactly where every dollar came from and went. At the end of each period (week or month), you can also transfer the information to a computer spreadsheet so that it is more accessible.

You can organize this notebook in several different ways. For simplicity, you may simply choose to use the notebook for spending. Alternately, you can treat it more like a logbook and record both your income and your expenses and how they affect the balance of your checking account. Some people choose to use a notebook to track cash expenses only, combining it with debit and credit card expenses at the end of each month or week.

3. Keep a checkbook. It may be considered old-fashioned, but recording your transactions in a checkbook is still a simple and reliable way of tracking your finances. The recording process involves simply writing down the amount of the transaction, writing a description of the transaction (a good place to write down the category), and then adding or subtracting the amount from account balance. For more information, and a look at balance a checkbook, see how to balance a checkbook

4. Use a computer spreadsheet. By using a simple spreadsheet on a program like Microsoft Excel, you can organize your expenses clearly and even create graphs easily to better understand your spending. They are many specific ways to do this, but a good start might be to create a personal budget. This would be done on a week or monthly basis, and include information like the amount, category, and date for each transaction.

To create a personal budget, start by listing your fixed expenses each month (like rent and utilities) as an expense on the first day of each month, along with your expected income for that month. You can then subtract other expenses or add other incomes as necessary throughout the week or month.

5. Analyze your finances at the end of each month. Regardless of which method you choose to keep track of each transaction, you will need also need some way of combining and analyzing your spending at the end of each month. This will allow you to see where your money is going and allow you to make adjustments for next month if needed.

Start by totaling your expenses and compare the sum to your income for the month. Obviously, if you're spending more than you're making, you'll have to identify the source of your overspending and try to make a change for next month.

To identify where your money is going, you can try totaling your spending by category. That is, you should combine the totals spent in each expense category and compare them either to each other or to your total expenditures. Specifically, you can divide the total of each category by the sum total of all of your expenses for the month to get the percentage of total expenses accounted for by that category. This will allows to you identify areas where you might be overspending.

You can also use this information to create a working budget for next month.

Method 2 Using a Personal Finance Application.

1. Select a personal finance app. There are a multitude of personal-finance apps available both for mobile phones and web browsers that offer services to track, tabulate, and analyze your expenses. These apps also offer a range of comprehensiveness, from simply acting as a budget-creation tool to displaying all your assets in one place. In choosing one, keep in mind your financial goals and ability to commit to using the app.

You may want to choose a comprehensive app that pulls in all of your financial information from bank accounts, retirement accounts, and other sources. These often also track your bills and remind you to pay them. Award-winning examples include:

Mint, Personal Capital, Pocket Expense.

Alternately, you may want a simpler app that just keep track of your expenses and/or your income. These apps also connect to bank, but offer a simpler interface and fewer options than the more comprehensive apps. Good examples include:

Level Money, BillGuard.

Finally, if you want to use an app to track your finances, but don't feel comfortable handing over your financial information (bank passwords and account numbers), there are also apps that function as manual-input ledgers and analysis tools. Good examples include: Mvelopes, You Need a Budget.

2. Input your information into the app. If the app you have chosen requires bank information, input your information and wait for the app to sync with your accounts. Alternately, input your own transaction information as you spend money and watch the app work its magic. The apps will guide you during this process.

3. Study the app's analysis. At regular intervals, the apps will supply you with analyses of your spending habits. Be sure to actually read these reports and think about adjusting your spending habits if necessary. Some apps will provide guidance on how to save money in certain areas.

Tips.

This article is mainly about keeping track of your expenses and income. For more information about managing your finances and saving money, see how to save money and how to manage your finances.

Try to minimize your use of cash, as it tends to be more difficult to track than debit or credit card expenses.

January 12, 2020

How to Prepare a Personal Finance Statement

How to Prepare a Personal Finance Statement.

Preparing a personal finance statement is a great idea. You are trying to get an idea of where you stand financially. You are considering a major life change that will affect your finances. You will need a personal finance statement. You want to start your own business, change careers, retire or travel the world. Prepare a personal finance statement by creating a balance sheet and an income statement that reflect what you have and what you owe.

Steps.

1. Decide what format will work best for you. Most people prefer to use a spreadsheet program such as Excel.

Use a simple pad of paper and a pencil, if you are not good with computers. A handwritten finance statement will be fine if you are the only who will see it.

Consider a software program that might help you prepare a personal financial statement, such as Microsoft Money or Quicken.

2. Create a balance sheet. A balance sheet will show you how much you own and what you owe, giving you an idea of your personal net worth.

Include assets in a column on the left. These will include bank account balances, the amount of money you have in stocks and the value of any property you have.

Place your liabilities in a column on the right. Liabilities will include your mortgages, credit card debt and other loans you are repaying.

Total the amount of your assets and liabilities. Subtract your liabilities from your assets. You will have a snapshot of your net worth.

3. Create an income statement. This part of your personal financial statement will show you how much money you earned and how much you spent.

Add up all of your income, including salaries, bonuses, rental and business income.

Add up all of your expenses, including what you pay in rent, utilities, fees and other regularly occurring bills.

Keep a special column or section for extraordinary occurrences of income or expenses that do not happen on a regular basis. For example, a large tax payment, a sizeable bonus or an expensive home repair might throw off your income statement and can be recorded separately.

Tally the difference between your income and expenses, and you have an idea of what your net income is.

4. Update your personal finance statement regularly. You might want to do it every month or every other month. This will help you monitor any changes in your finances.

5. Include a narrative with the numbers. This will help you remember what was going on during any specific period of time.

Provide a brief description of any special expenses. Mote how you calculated some sums, such as the value of your home.

6. Work with a financial planner or advisor. Ask a professional to review your personal finance statement to see if you have missed anything.

Tips.

Download templates if you are using Excel. You can find a Balance Sheet template and an Income Statement template in the Microsoft Office template library.

Use your personal finance statement for a variety of purposes. You can share it with lenders when you want to get a loan. An attorney if you are considering a major purchase or a bankruptcy and business partners you may consider investing with.

November 28, 2019

how to prepare a personal finance statement

How to Prepare a Personal Finance Statement.

Preparing a personal finance statement is a great idea. You are trying to get an idea of where you stand financially. You are considering a major life change that will affect your finances. You will need a personal finance statement. You want to start your own business, change careers, retire or travel the world. Prepare a personal finance statement by creating a balance sheet and an income statement that reflect what you have and what you owe.

Steps.

1. Decide what format will work best for you. Most people prefer to use a spreadsheet program such as Excel.

Use a simple pad of paper and a pencil, if you are not good with computers. A handwritten finance statement will be fine if you are the only who will see it.

Consider a software program that might help you prepare a personal financial statement, such as Microsoft Money or Quicken.

2. Create a balance sheet. A balance sheet will show you how much you own and what you owe, giving you an idea of your personal net worth.

Include assets in a column on the left. These will include bank account balances, the amount of money you have in stocks and the value of any property you have.

Place your liabilities in a column on the right. Liabilities will include your mortgages, credit card debt and other loans you are repaying.

Total the amount of your assets and liabilities. Subtract your liabilities from your assets. You will have a snapshot of your net worth.

3. Create an income statement. This part of your personal financial statement will show you how much money you earned and how much you spent.

Add up all of your income, including salaries, bonuses, rental and business income.

Add up all of your expenses, including what you pay in rent, utilities, fees and other regularly occurring bills.

Keep a special column or section for extraordinary occurrences of income or expenses that do not happen on a regular basis. For example, a large tax payment, a sizeable bonus or an expensive home repair might throw off your income statement and can be recorded separately.

Tally the difference between your income and expenses, and you have an idea of what your net income is.

4. Update your personal finance statement regularly. You might want to do it every month or every other month. This will help you monitor any changes in your finances.

5. Include a narrative with the numbers. This will help you remember what was going on during any specific period of time.

Provide a brief description of any special expenses. Mote how you calculated some sums, such as the value of your home.

6. Work with a financial planner or advisor. Ask a professional to review your personal finance statement to see if you have missed anything.

Tips.

Download templates if you are using Excel. You can find a Balance Sheet template and an Income Statement template in the Microsoft Office template library.

Use your personal finance statement for a variety of purposes. You can share it with lenders when you want to get a loan. An attorney if you are considering a major purchase or a bankruptcy and business partners you may consider investing with.

November 25, 2019