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Save Money By Keeping Track Of Your Receipts
For many people the hardest part of everyday is keeping track of where their money is going.
Accounting practices can be complicated, especially if you have several different businesses. For example, a person could own rental property, sell AVON, babysit and repair small engines on the weekend in addition to a regular or part time job. Each of these situations have their own tax write-offs associated with them making it very important to keep track of all the associated expenses.
My solution is to create a paper trail.
I have one credit card and use it for everything from paying bills, grocery shopping and lunch to buying new clothing and the odd vacation. As long as you pay the credit card off before it is due every month this is an excellent way to keep track of where your money is going.
When you receive your credit card statement you will easily see your total monthly expenses totaled at the bottom. It can be quite an eye opener to see how all those lunches and clothing are adding up.
Even though you have your credit card statement it is important to keep every receipt for every purchase you make. As soon as you receive your credit card statement sit down with your receipts and a pen and write on your statement what every purchase was for.
If a purchase on your statement was for a specific business pull that receipt and put in into the appropriate tax file so it is sorted for tax time. Then mark on your credit card statement the name of the business that purchase was for. For example, if you made a purchase at RONA for repairs to your rental property write RENTAL on the appropriate line on your credit card statement, take the receipt and place it in a file folder labeled rental so you have it for your taxes.
Do this for every line on your credit card statement. When you are done every purchase should be marked with a tax designation (rental, AVON, babysitting, etc) or simply 'personal' if the receipt can't be used on your taxes. If you come across a purchase without a receipt, simply write what it was for if you know - after all it is possible to lose receipts.
When you are done you should have accounted for every purchase you made that month. If there are items that you don't recall making, call your credit card company and inquire about them. It is possible that a mistake was made or you've become a victim of fraud. Most credit card companies are good about reversing questionable charges.
After you have consolidated your credit card statement to your satisfaction put your remaining receipts into the order they appear on the statement and staple them between the statement sheets. Now you are done.
This method of tracking your money is easy once you get into the habit of pulling out your credit card instead of your debit card or cash to make a purchase. Collecting and keeping track of your receipts for that month is easy - just keep a basket or container with a lid in a handy spot and put your receipts in everyday.
If you take the half hour once a month to consolidate your credit card statement you will be able to see at a glance exactly where your money is disappearing to. You may even be surprised at exactly how much you are spending on unnecessary items.
As a reward for your diligence use a credit card that offers a 'rewards points' program and treat yourself to a 'reward' once a year.
This method only works if you use your credit card for all your expenses, keep your receipts, consolidate your statements and most important, pay your credit card off totally, every month before it is due.
With a little self-discipline you can you can make yourself more aware of your personal finances.