Cheddarblog

TRACKING

The Swiss_Mouse will not go into great deal at this time about Tracking, but he will touch on the subject and save the full details for a more verbose post later.

Tracking is basically marking down how you spent your money. We discussed the budget, tracking is really just making sure that:

1. You stick to that budget by not spending more that what you have earmarked for any particular category.
2. You know how to ADJUST your budget to reflect what you really spend.

Item #2 is extremely important. As the Swiss_Mouse stated in a previous post, he has been tracking his spending habits for 15+ years. His budget ACCURATELY reflects what he spends. There is no guessing.

M rs. Swiss_Mouse has not caught on to that yet. She will gleefully say “OH just take that money out of clothes! WE don’t need that much.” Wrong. Just because there might currently be a cash surplus in any particular category, that does NOT mean that you can spend it in other categories OR change the budget to just “move” your allocated amount. THAT will come back to haunt you.

The Swiss_Mouse suggests that you start simple. Keep just your budget with general ledger and know how much you have in each category (using paper or spreadsheet). But as you spend, record the fact that you SPENT a certain dollar amount on a certain category. Keep a running total of this amount (OH a Microsoft Excel spreadsheet is so nice for this). In a year you will be amazed at how much you THOUGHT you spent on certain categories versus how much you REALLY spent.

The Swiss_Mouse has gone a step further. As he said previously he will write a series of posts and maybe even publish his tracking spreadsheet. The Swiss_Mouse uses a spreadsheet. Every time he spends money in a category, besides taking it out of his ledger, he records it in a tracking worksheet specifically for that category. This worksheet averages out how much the Swiss_Mouse needs each paycheck in order to keep in sync. The Swiss_Mouse calculates the difference between what he is currently budgeting and how much his tracking says he really needs and adjusts his budget accordingly.

Looking at the above, the Swiss_Mouse realizes it is difficult to put into words. But trust him, this system allows him to “automatically” budget and keep track of his spending.

REPORTING

When all is said and done, the Swiss_Mouse needs something to give Mrs. Swiss_Mouse to tell her how much money we have, how much we need, how much we budgeted and how much we are worth.

The most important of the reports is the general ledger. This is simple a page that lists out the overall balance of the Swiss_Mouses account and a breakdown of how much is in each category. That’s it, but it’s very important. It tells the Swiss_Mouse if he has enoug money to eat out, buy clothes or even pay the utilities. There are a few other items on this report but we’ll save it for a future post.

In addition to the general ledger, the Swiss_Mouse has the following reports or worksheets that he can print and are up to the minute accurate:

• Budget: This worksheet lists out the budget the Swiss_Mouse is following and at the bottom calculates surplus or deficit so that the Swiss_Mouse can adjust accurately.

• Income: This worksheet lists out for the last 15+ years the income that the Swiss_Mouses have made. It breaks it down by the categories on an income tax form. So Federal Wages, Federal Total, Federal Adjusted Gross. The Swiss_Mouse usually only prints this once a year but it gives him a good indication of his past earning power.
• Net worth: To be covered in the next few days, Net worth allows the Swiss_Mouse to know EXACTLY how much he is worth and how that figure is broken down in to asset classes.
• Yearly Tracker: This report is printed once a year. It is basically how much the Swiss_Mouse spent in each category. The Swiss_Mouse can then tell what categories are costing more (Gas for instance) or less ( Medical Expense).

Conclusion

This is just the tip of the iceberg! The Swiss_Mouse is just giving you an overview of how he tracks and budgets his money. There will be more detailed posts in the future.