In managing your personal finances and planning for retirement, another aspect that needs to be addressed is bookkeeping. Yes. Mundane, ordinary bookkeeping. It’s hard to keep track of what’s going on with your money unless you do some basic bookkeeping. You don’t have to be a CPA or have a college degree. There are some basics that you can do and stay ahead of the game.

First of all, you have your bank statement to keep track of your spending. You can buy a “canned” program, but you can also use Excel. Many banks, I believe, allow you to download your information that appears on your bank statement as an Excel file. There, the work can begin, but it’s pretty simple. Look at your cash inflows and cash outflows during the month. Then you’ll have your net cash position. The cash you take out, if you do, can simply be recorded as a miscellaneous expense.

This will be the first step to see what’s coming in and what’s going out. The difference is a critical number that I will discuss in my next post.