There are so many factors in the world of financial management in which we have no control. It is important to control the things that are within our power regarding financial management. Last week, I mentioned that adhering to some simple financial principles can help you make financial decisions and lessen the risks of financial burden in your everyday life. For the next few weeks, I am going to elaborate on these principles. The first of which is to “pay attention”.

Keep A Ledger

How do you determine the amount that is in your checking or savings account? Do you check your banking app to see the balance before you make a purchase? How do you make payments? Do you write checks? Do you have bills set up on automatic withdrawal? Do you keep receipts from purchases and deposits? Everyone makes payments differently. Some still write checks for almost every expense and others make payments exclusively online, and a majority of people do a combination of both. But, are their records correct?

This is where a ledger comes in. “Ledger” is a financial term that just means “record”. The most common example of a ledger is a checkbook register, although all forms of financial accounts have some form of a ledger, even credit card accounts. It is important to know the balance of your account(s) at any given time. Even though you may not know the exact amount, keeping a ledger will give you an idea of what you have available. For instance, if you recorded transactions in your checking account on a Monday and the balance was $225.17, if you are at the grocery store on Wednesday and your amount owed is $117.25, you know you will have a remaining balance of approximately $108.00. When you return home, you can use your receipt(s) to update your account ledger and know your exact balance will be $107.92. Of course, this is assuming you didn’t make any other purchases on Wednesday before you went home. Even if you did, you arrived at the other location knowing you had about $108.00 available to spend.

Keep your receipts and enter the transactions on you ledger to give you a real-time balance of your account. Keeping a ledger allows you to see what money has come in and what money is going out.

Thank you for reading!