Tracking money, your first step to financial health

The first step toward financial health and well being is knowing where your money is going, and whether or not you are staying within your income. Tracking your money is a critical part of budgeting well, of getting out of debt, or finding money for investing, and all other aspects of financial health. So how do you track your money effectively? There are a number of methods, some of which are more appealing to than others. The following are some of the basics:

1. The old fashioned pen and paper method. It may not be high tech, but it serves its purpose. One of the best ways to track your money is to just write it down, use a notebook. Anyone can do it, it does not require a password, or an expensive program. It can be done wherever you are, and is fast and easy. Just keep a notebook in your purse, car, bag, briefcase, etc. and write down what you bought, and how much it cost. If you want to make sure you are not getting in debt, then calculate after each purchase how much you have left in your bank to spend. In other words, balance your book with each purchase.

2. Using an easy to follow online banking system. Another way to track what you spend is through your bank. Most banks have some sort of spending report you can print out. They basically track and categorize your purchases made on debit and credit cards, or even checks, and you can see what you spent and where. Of course, you have to track any cash purchases yourself, and sometimes things will be mis-categorized, so you will want to go over it, and manually make adjustments to the figures.

3. Using a check register, or other register. A register is a great way to track your finances, and helps you stay on top of your spending.

4. Using phone applications. Many phones, such as the iPhone, the G1, or many other fancy phones offer applications for things like tracking your spending. You just download the application, and then each time you spend, enter the amount and item into your phone. This is a great option because you always have your phone with you, so it is convenient, and it is computerized so you are less likely to make math mistakes.

5. Using computer programs. There are several computer programs out there for things like tracking your spending. Quickbooks is one example. Find one that fits your needs, and your level of computer literacy.

6. Using online tools. A good example is mint.com. There are several sites out there that offer services for helping you track and manage your money better. So, if you are computer and internet savvy, this is a great option for you.

No matter how you do it, tracking your money is necessary because you can't plug leaks, or change habits if you do not know where and what they are!