Okay, so you've got needs, wants, saving goals, and expenses. How do you know if your money will cover all of it? The best way is to keep track of your cash flow, which means you keep a record of every amount you earn, spend, and save. If you've seen a parent balance a checkbook, she or he is tracking cash flow.
Keep a Cash Flow Journal
For the next month, keep track of your cash flow by creating a Cash Flow Journal in a notebook. Make two columns: One called "DEPOSITS" and the other called "WITHDRAWALS."
- A deposit is money you take in.
- A withdrawal is money you take out.
Next, add a column for the date, which will help you keep track of when you deposited or withdrew your money.
Then, make a column on the end called "BALANCE." A balance is the amount of money you have after adding deposits or subtracting withdrawals. Your Cash Flow Journal could look like this:
Create a Monthly Spending Journal
Another way to keep track of your spending is by creating a monthly journal to track your expenses. To get started, print and fill out our blank Monthly Spending Journal, then follow these steps:
- At the top of the page, write the month and year. For example: September 2004.
- In the eight columns going across the top next to "DATE," fill in your different types of expenses, such as "Clothes," "Food," "Activities," etc. You might want to label one column "Other" or "Miscellaneous" for expenses that don't fit into any of the other categories.
- For each day of the month, fill in amounts you spend in each category.
- In the last column, "TOTAL FOR THE DAY," you'll add up and write in the total amount you spend each day.
- When the month is over, add up each category column and enter the amount in the last box, next to "TOTALS." This is how much you've spent on each type of expense.
- Add each of these totals and write the sum in the last box. You can double-check your math by also adding all the numbers in the "TOTAL FOR THE DAY" column. The amount for both should be the same, and this is the total you spent that month!
For more help, check out our sample Monthly Spending Journal.
When you know how much money is coming and going, you can then Create A Budget.