Always Know Your Income and Your Expenses!

It sounds so simple, make sure that you are spending less than you make, the problem is that most people have no idea of how much they really spend and only a vague idea of how much they earn. This makes it impossible for them to come up with a budget so they really don't know if they are spending less than they make or not. This is a situation that needs to change.

The obvious reason that you want to make sure that you always know your income and your expenses is so that you can be sure that you are making more than you are spending. It is important that you have a budget and that you actually stick to the budget. Obviously if you are going to create a budget you have to know how much money you have coming in and going out. It is surprising how few people really know how much they make; let alone how much they are spending.

Keeping track of your income is pretty easy for most people since there only source of income is their job. Even here it can be a challenge, especially for employees who are paid hourly. Things get a lot more complicated if you have multiple sources of income. In this case you will probably getting a big part of your income from investments. This makes it hard to keep track of your income because not only is the money coming from a variety of sources it also fluctuates from month to month.

While keeping track of your income is fairly straightforward keeping track of your expenses is a much bigger challenge. Most people are able to add up all of their major recurring expenses. This would be things like your mortgage, insurance, taxes and things like that. Since you normally get a bill in the mail for each of these you can simply gather up all of these bills and add them up. The bigger problem is the daily expenses that you have. These would be the things that you pay cash for during the day. Most people seriously underestimate the amount that they spend and this has a real impact on their budget.

The best way to keep track of your income and your expenses is to keep a journal. Right down all of the money comes in and all of the money that you spend. In order for this to work you will need to make sure that you right down everything. You are also going to want to do this for a few months so that you can make sure that you are getting accurate results. Most people are surprised when they actually see it written down, especially how much they are spending. Although it may be shocking it is best that you do know the truth so that you can address it.