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Rule #1: Keep Track of Your Money

July 19th, 2007 by shawn · 7 Comments

We talk a great deal about how to earn money on this blog. I have mentioned a few online methods of earning dollars including affiliate programs, pay-per-click programs, and even selling stuff online. We also have talked about “real world” methods of earning money.

But one thing I haven’t really talked about is keeping track of your money. You need to keep track of what you pay out, as well as what you earn. In other words you need to keep a budget in order to know if you’re being successful or not.

There’s more than one way to do this.

  • Use a Notebook. Write down what you spend. Write down what you make. This is the simplest and cheapest way to do things. It takes a bit of discipline and isn’t the prettiest way to do things, but it’s better than nothing!
  • Keep a ledger. This is the old-school way to keep track of your expenses. You can even buy one of those bookie hats while you check out your budget so it will be more fun.
  • Excel spreadsheets. This is more accessible and easier for most people to do. Spreadsheets can be configured to calculate a running balance, and it’s a no-frills way to keep an eye on your money. I actually do this for all my affiliate programs and PPC so I can see what’s up.
  • Personal finance software. I’m talking about Quicken or Microsoft Money here, but I can’t wait to try out Mint when it opens up to users.
  • Business budgeting software. If you’re a regular guy like me who isn’t running an entire business this might not apply, but if you run a business with employees well of course you need actual business budgeting software like Clarity.

You know how in those old Looney Tunes and Tex Avery cartoons, when someone would do something really dumb they would turn into an old shoe and the word “HEEL” would appear? If you don’t keep tabs on your finances, that’s you. (For those who don’t have any clue what I’m talking about, you need to add some quality classic cartoon viewing to your visual diet.)

Seriously, if you don’t keep up with how much is coming in vs. how much is going out you cannot know if you’re making a profit or not. So the first rule of becoming a success is keep track of your money.

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    Comment by Lia
    2007-07-25 05:29:01

    Oftentimes I find myself just wondering “where did my money go?”. So thanks for the tips. I really need to do this.

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    Comment by webfetti dude
    2007-07-28 23:41:06

    I use excel spreadsheets.. it works wonders for me.. I was wasting quite a bit of money on unprofitable campaigns before doing that ;-)

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    2007-07-29 09:34:32

    I usually keep a spread sheet but it’s becoming bigger and bigger. It’s turning into a freakin monster!!

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    Comment by shawn
    2007-07-30 22:19:59

    Dude – that’s awesome. It means you’re making money, right?

    2007-07-31 12:34:44

    Not really. Just means it’s getting more and more complicated! :P

    Comment by Patrick
    2007-07-31 16:59:33

    I need to get my wife to read this post!

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    Comment by Ned
    2007-08-15 03:13:49

    I’ve tried using programs like Gnucash in the past…even wasabe, but they never seem to work for me. I can’t keep them up to date. I am constantly making lists on pieces of paper…my house is full of them. I think I may be more of a notebook kind of guy. thanks for the reminder of the low-tech solution.

    i absolutely agree that this is a fundamental step in making money: understanding your own cash flow.

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