Do you know where your money is going?

Do you know how much you spend on groceries, TV, entertainment, dinning out, Mortgage, insurance etc etc. A lot of financial drains can be traceable and others can just penny pinch you to the poor house. Do you pay banking fees? No? Do you have to maintain a minimum balance in your chequing (yes I'm Canadian) account?

If you pay banking fees ask yourself why you continue to do this even though there are alternatives out there that don't cost a thing. President's Choice Financial, ING direct, and from what I've heard Chase all have free chequing accounts. So again why are you paying banking fees? If you are one that enjoys a brick and mortar banks live person service that may be worth the bank fee.

This article isn't really about any specific financial drain category but more about being informed about your financial situation. This may seem like a daunting task but like most things once you have it running it just requires maintenance. Nowadays with personal finance computer software available the maintenance is as easy as a click. I've used the manual spreadsheet style of personal finance then graduated to Intuit's Quicken. Quicken annoyed me enough for me to leave and use MSMoney for a few years but the functionality in MSMoney for different currencies (yes I'm Canadian) is lacking sending me back to Intuit's, whom had learnt their lessons about how to treat their good customers, Quicken.

Currently I now use Quicken and download all banking/Visa/Mastercard statements into quicken via the banks interface. Ie. Login to the bank and chose the option to download into Quicken. Voila it's done.

This is where the organization comes in. A BUDGET will allow you to assign categories.... WAIT!!! don't stop reading already...

Okay lets skip the budget babble... A budget is just a tool do with it as you will and use it the way it fits yourself. One thing these two software packages (that I used) do is show you your IN flows and your OUT flows. This can be very useful if you just want an overview of your finances and don't want to get to detailed. They can also be a one stop view of all your accounts be it credit cards, mortgages, lines of credit, bank accounts or even investment accounts. Now that's organization.

Now that you have a general view of your financial situation you can start to find out where your money is going.  Assign categories to your spending, groceries, dining out, bank fees (grrr), mortgage, retirement savings, gas, auto maintenance.  Yes I'm "anal retentive" and have many categories but like I said the budget is just a tool use it as you see fit.

GREAT! Now we know where all our money is going and DOH! it's more than we make.  You are alone in this problem.  Most people live within their means.  NOT!!!  Very few people are successful in living with in their means even people like me that employ a detailed budget.  Living within your means is a balancing act between enjoying life and preparing for the future.  Short term pain for long term gain...   Whoops almost lost you again there...

Bottom line is know where your money is going and then you have power to change that.  Use the tools out there that help you organize yourself there are many.