Writer: D'Lyn Ford
LAS CRUCES -- The end of the year brings a time of reflection about what has happened over the past 12 months. Many people start to wonder where their money went. Often, panic sets in because it's almost time to prepare tax forms, said a consumer education specialist with New Mexico State University.
"A box full of canceled checks and some miscellaneous receipts is all that some people can find," said Susan Wright with NMSU's Cooperative Extension Service. "If this is true about you, now is the time to turn over a new leaf regarding your financial record keeping."
An effective financial record-keeping system will provide a way to organize and file receipts, canceled checks, income statements and financial papers, and a way to summarize information about income and expenses, Wright said. The best record-keeping system is one that works for the individual. Typically, this will be a simple system that allows easy access to information.
Some popular, basic record-keeping methods are:
* The receipt method that involves keeping, filing and sorting receipts according to categories of expense, such as food, rent, utilities or transportation.
* The envelope method that requires a set of envelopes -- one for each category of expenses. A budgeted amount of money is placed in the envelopes each week or month. As the money is spent, the amount is recorded on the envelope.
* The ledger system that requires detailed entries for expenditures. Use a store-bought ledger or make one with a spiral notebook. Generally, entries are made each day.
Computer software also is available for financial record keeping. "It allows you to create a ledger with as many categories of expense as you require and expenses can be entered in each on a regular basis," Wright said.
There are no secrets to record keeping.
"It is simply a matter of making the time to keep up with it and the discipline to make the system work for you," she said. "It will be important to summarize the records on a weekly or monthly basis in order to determine how your money is being spent. If necessary, adjustments can be made in your spending plan."
When credit cards are used, the cardholder should record individual purchases in the appropriate categories of the record-keeping system. If the only record kept is the payment at the end of the month, it will be impossible to determine what was purchased.
"By using a record-keeping system on a regular basis, you will know where your money goes each month," Wright said. "The task of filing your taxes at the end of the year will be easy, because you will have an orderly record of all expenditures."
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