 Provides an objective view of your finances  Helps you live within your income  Enables you to chart your financial future

1. Get a receipt for all expenditures 2. If you don’t have one, create one by writing the amount spent, for what, and to whom 3. Label the receipts by expense categories from your spending plan 4. Regularly record amounts and compare them with the planned amounts in spending plan 5. For this method to work, all family members must follow this procedure

 Easy to sort  Simple to total  Serve as proof of purchase  Important for tax purposes

 Write in income whenever you receive it  Write in when bills and expenses are due  As you pay each bill, cross it off Advantage May be used to plan for larger irregular expenses that don’t occur every month, such as insurance payments, property taxes, or holiday gifts

 Set aside money for various expenses in separate envelopes on a regular schedule, using expense categories from your spending plan  Label envelopes with a specific purpose such as GAS or GROCERIES and the amount budgeted for each expense

 When you receive income, put the proper amount in each envelope  When the time comes, take the money for the expense category and note the date and amount spent on that envelope  At the end of a month or pay period, transfer any money left into a savings or emergency fund account

 Works well for tracking and controlling expenses purchased with cash  Simple, with far less recording or paperwork compared with other methods  Income conveniently divided to cover all anticipated expenses  Easy to see how much money is available to spend

 May be too tempting to “borrow” money day-to-day or if a shortage occurs  Having cash readily available may encourage careless spending  Risky to keep a lot of cash at home

 Combines checks and/or specially designated savings accounts  Checks are used for larger fixed expenses, such as rent or mortgage payments, car payments, and utilities  Envelope method used for cash expenses, such as food, household expenses, and transportation

 Paying by check for most expenses, recording transactions immediately, and keeping an up-to-date balance  Record what each check is for, where it was spent, and the amount  Balance the checkbook regularly and compare it with the monthly statement from your financial institution for accuracy

 On a regular basis, total the expenses recorded in your check register by expense categories and compare the totals with your spending plan  Total amounts can be recorded in a binder or notebook to complete the picture of where your money is going

 Provides valuable information about your spending patterns  Provides proof of payment  Two people owning a joint checking account can write checks from one checkbook

 Possible bank charges that add to your cost, such as fees for a low balance, for each check written, or ATM card and debit card fees  Joint checking accounts can result in problems if there is no coordination. Checks may not be recorded and or the checkbook may not be balanced

 Keep a daily log of expenses in an account book that you can create or you can buy an account book  Across the top, write in columns for each expense category from spending plan, possibly including the amount budgeted  As you spend money or pay bills, record expenditures in the appropriate column

 On a regular basis (weekly, monthly, etc.), add all of the entries for each category to determine how much you spent  Or you may subtract each entry from the amount budgeted in each category to determine how much you have left to spend  Each category can be compared to spending plan to see if goals are being met

 Advantage - provides a more accurate, up-to-date picture of your financial situation  Disadvantage – everyone in the family must be diligent in recording expenses almost daily for records to be accurate and up-to-date

 You can create your own expense sheets and tracking system by using a basic computer spreadsheet program  You also have the option of purchasing a commercial software program designed specifically for personal finance  Check with these companies to determine what program may be right for you

 These programs usually print checks  Balance checking account  Identify tax deductions  Provide graphs to help you analyze your financial situation

 Keep records simple  Avoid unnecessary detail  Appoint one person in the household to record family expenditures  Set a regular time for record-keeping  Getting behind can make it a challenge to catch up

 Analyze Expenditures Regularly  Are all expenditures listed?  Are all financial obligations being met?  Is spending within your income?  Are you satisfied with how your money is being used?  Are you satisfied with the amount being saved?