Tracking Your Money

Page 1

Tracking Your Money

It's really no wonder that so many highly intelligent, fully functional people feel that getting a grip on their money is like trying to nail Jell-O to the wall. The next time you're feeling like a failure for not fully comprehending our modern-day money system, consider these facts about money today:

• Money is invisible – "Yeah, no kidding money is invisible," you're thinking. "Mine vanishes all the time!" That might be true as well, but what I mean is that we never actually see or touch most of our money. You could earn $50,000 a year and handle only $1,040 of it – $20 a week – in actual cash. Our banking systems are so fully automated now, with electronic payment methods becoming the norm even at fast-food drive-thrus, that carrying more than $100 cash can feel unnecessary and maybe even dangerous.
• Money time-travels – It's startling to realize how much of your money doesn't actually exist at a given moment. Consider the basic checking account. It seems like a repository for your cash, but that checking account is actually a short-term line of credit. The bank holds your money and lets you write permission slips for other people to come in and take some of it. So that money is committed to someone in the future, but for now it's still there. When you deposit a check, the bank might put a hold on it until it can confirm the money will actually come through. So, it might seem that you have the money in your account now, but in reality that money exists for someone else a few days in the past, and it won't be yours until a few days into the future. Mind-boggling, yes? Add in the phenomena of the ATM transaction that clears in 3 days, the 30-day revolving credit card account, and the 30-year mortgage, and you just might find yourself yearning for the old cash-under-the-mattress system.

If you're still feeling self-critical, don't worry. You'll lose the guilt once you've completed the projects in this chapter. Now, let's get started.

You'll need list

• Paper and pencil and/or your computer
• A case or container for your receipts
• Bills to be paid
• A calendar

Arming Yourself with the Right Organization System
There are hundreds of "right" ways to organize anything, whether you're trying to apply order to your finances, your garage, or your clothes closet, but every successful system has a few things in common:

• Comprehensiveness – The system covers the common components of the area it is addressing (for finances, that would be checking accounts and credit cards), but it can also accommodate not-so-obvious components (such as cash spending).
• Simplicity – The system is no more complex than it has to be.
• Appropriateness – The system is a good fit for the user's skills, patience, and available time.
• Flexibility – The system can be changed as needed when life changes come along.

A good organizing system has quite a lot to live up to. In contrast, you have just one duty: Consistency. No system, no matter how perfect, will work if you don't use it. The system has to do most of the work, but you have to create it and follow it for it to perform for you.

With that in mind, let's get started on your first project: a method for keeping transactions from slipping through the cracks.