Where Did Your Money Go?

Do you ever ask yourself: Where did your money go? You made an ATM withdrawal just a few days ago and now you have no money in your purse or wallet.

You may have heard stories of people who got paid on Friday and before the next payday they have no money so they use their credit card or they borrow from a relative or friend. After a while they can no longer charge anything on this first credit card. They start to avoid seeing their friends and relatives because they owe them. This situation keeps repeating itself over and over again.

2013 American family monthly spending budget - Bureau of Labor Statistics

In some cases, a person may receive a lump sum like a bonus check, their tax refund, an insurance settlement check or they win a lottery and they have nothing to show for the money they spend. You may have also heard about some entertainers and athletes who had multi-million dollar contracts and they eventually go bankrupt. Later we will discuss how to manage lump sum payments and large contracts.

Monitoring Your Paychecks and Your Bill Payments

The act of finding out where your money went and setting up a simple and easy way to track your money is very crucial. It is necessary for managing your money efficiently and it will help you to stay out of debt. Here are a few things you can do to get started:

• On a day of your choice, get a pen and a sheet of paper and make a list of what you and/or your family bought with check, cash and paid towards your credit card/loan balances during the previous month.
• Review your bank account and add your ATM withdrawals to this list. You may print out the transactions for the month to help you determine the payments made.
• You may go online and review your payments to your credit cards and other accounts to help you recall your paid transactions. Print out these statements also and add the paid transactions to the list of payments.
• Compare your total net paychecks for that month with the total payments you made for the month by subtracting the payments from your net paychecks. A positive result is a surplus but a negative one is a deficit.

The comparison of your total paychecks and your total payments is referred to as your Cash Flow. You may also use this Cash Flow Calculator to calculate your Cash Flow. Follow the simple instructions and print and save the document in pdf format so that you will have a starting point to refer back to regarding your cash situation and projection. Later, I will explain how to go paperless and automate this process so that you will be able to find any document easily and know your financial status at any time very easily - Register with Mint.com for a quick start and enter your accounts for a complete review of your finances.

Now that you went through these tedious procedures to know where your money went, in the upcoming Blogs we will be setting up easier and simpler ways to track your paychecks and other income and your other bills by automating your finances. It is better to tell your money where to go than to ask where it went.

See you at the next Blog. All the best!