When I would go to the market or shopping with my mom when I was little, I always remember when my mom would pull out her checkbook ledger after she handed the cashier a check (this was when people still used checks on a regular basis) to record the spending. It was automatic: Write check, record it. It didn’t take much time at all; she was often done before the bag boy had finished putting away our groceries. Or on rare occasion, she would fill out the information in the car before we drove back home.
Your parents’ money habits typically influence yours. Unfortunately, this is not a habit I picked up until after college. During my post-graduation lull, my parents gave me an allowance of $200 a month and I was making less than $100 a week for a part-time gig at the money radio show. There was the occasional freelance gig here and there. So conservatively, I had about $450 a month. Even though I didn’t have to pay rent to stay at my parents’ house, I ran through that money fast. I resolved to dig out a couple of ledgers and keep track of my spendings, so I could take a critical eye to my financial habits and start saving.
The blue ledger recorded the comings and goings of my Bank A savings account; the pink one was for my Bank B checking account.
For at least a year, I was pretty good about recording everything. I’d stick all my receipts in the little pocket in the pink ledger and record spendings on the spot or at least within a day or two. I liked this system, because it made me very aware of how much I had available to spend. If I wasn’t sure if I could make a purchase or not, I could just pull out the pink book and decide to wait, buy or just forget about it.
I stopped using my ledger around last summer, when school and work got to be too much. But I really regretted that decision. Again, I’d zip through my money and not have a clue where it all went. But I resolved to pick up the habit again this year, while I stay afloat on my savings.
Sure, there are products like Mint — which I also use — and many bank websites out there that transfers all your account data into one place. But it won’t record the check you sent for that parking ticket until the agency clears it or that dinner you paid for on Saturday for several days, until the restaurant processes the charge. And I don’t have a smart phone, so I can’t access that information digitally.
You already know you spent it, so why not record it and get an instant read of what’s in your account?
Eventually, I also set up a set of spreadsheets in Google Docs for various accounts. I put in formulas, so it automatically calculates the account balance when I enter income and spendings. What I like about the spreadsheets is that you can run simulations. Let’s say I found the perfect birthday gift for a friend — is this something I can just plunk down the money for on any given day without hurting my budget too much or should I save for it? I can pop the amount in my checking account spreadsheet and assess whether this week I can buy that gift or if I need to find something at a lower price point.
The point of my story is that the best solutions isn’t always a digital one. Keeping financial records can take many forms and this is just one of many that people use today. The best thing you can do is to experiment to see what works for you. However, I think regardless of what system you choose, you need to make it a daily task to tally your spendings. I don’t scribble down each withdrawal or deposit immediately after it happens often, like my mom did. But I do make an effort to sit down and record my receipts at the end of the day, if I spent money. I noticed that if I go more than three days without recording, it ends up becoming a headache chasing after receipts and trying to remember what dollar amount went where. Those few minutes each day give me peace of mind. Understanding how much I have available to me — even if it’s near zero — is much better than nervously waiting for a verdict on the card machine when you’re at the store.