Tracking your money is one of the key elements of your personal finance health.
Tracking incomings and outgoings allows you to see where your money is going and how much money you have left over each month. Having this information helps you to see with ease areas you can reduce your spending and increase the money your are putting into investments.
Another important reason to track your money is that it allows you to see your net worth and track how much it will increase by as time goes on. This allows you to see when you will hit key milestones and also help motivate you to keep on track.
You can also use a tracker as a modelling tool to see if certain changes were made to your investing and spending habits what the effects on your net worth would be.
Google sheets is a great place to start, they offer free spreadsheets you can access from anywhere, but MS Excel will do the job as well.
A good place to start is by listing down all your out goings, fixed or variable they all need to be tracked. You should also track your predicted outgoings at least 12 months ahead, this allows you to see if you have any upcoming bills larger than normal and means you can also plan to put money aside for these. Tracking your outgoings helps you to keep on top of your finances and lets you see where you are each month.
Tracking your fixed out goings is fairly easy as these remain the same every month. To track your variable outgoings such as credit cards you can usually find the way the minimum payment is calculated using your statement or by contacting the provider of the variable payment to find out how it is calculated.
Remember to also include costs like petrol and food costs.
Once you have all your out goings listed then you can begin listing your income, if you work a salary job this will be fairly easy. If your income varies then try to make a best estimate.
With this complete you should now be able to easily see your incomings and outgoings and this should allow you to add in things such as saving for holidays in a way which is affordable and manageable. If your outgoings are exceeding your income you can also look at what can be reduced in order to bring them inline. Alternatively you will need to look to increase your income.
You can also use a money tracker to help see your debts if you have any and track how much your debt is reduced by and also see when your debts will be cleared by. You can also keep track of key dates when promotional offers on credit cards end if you have these, then align these with your out goings so you can plan to put money aside to cover these. Seeing how much your debts will be reduced by can be a great way to see when you could be free from them and keeps you in control.
Savings and investments
You also need to track your savings and investments, this can help you to keep track if you have lots of different investments and also see what their expected growth will be. This will also allow you to see your net worth and expected growth of it so you will know when you expect to hit key milestones!