The first personal finance skill: On tracking your spending

Learning how to manage your personal finances, how to save and invest, and how to end up on top, cash-wise, at the end of the month is a long process. But there is one crucial first step that you need to take if you're going to be the kind of lady who knows where her dollars and cents are at: Track. Everything.

Let's say you're an everyday girl who wants to be better about money. Maybe you have some worrying credit card debt, maybe you want to save up for a European vacation (hopefully, not THIS European vacation), maybe you just want to get your financial house in order so you can stop worrying about paying the bills every month? Or maybe you're like me - five years ago I went from having an actual job to being a barely-paid graduate student, and had a rough, debt-filled adjustment before I got the hang of living within my means. Whatever the situation, I strongly recommend tracking your incomings and outgoings as the first step in your financial revolution.

So, what do I mean by tracking? Well, basically, I mean committing to spending a month (or two) keeping track of every penny that you earn or receive and every penny that you spend. When you dig cash out the sofa for a Sbux latte, when your great aunt Petunia sends you a crumpled $10 bill in the mail for your birthday that was three months ago, whenever you receive or spend money, you track it. This doesn't have to be as appalling as it sounds.

Over time, I've got this down to a science. First, I've linked all my credit cards and bank accounts to Mint.com.  Every morning when I wake up, I log into Mint on my smartphone and skim through my accounts, noting what I've spent and any deposits into my accounts. This makes tracking all your debit and credit card spending and all your incoming bank transfers a breeze. I like to keep on top of what's coming and going daily (this is also a good way to ward off credit card fraud, which has actually happened to me!), and then at the end of the month(ish), I go over my accounts in Mint on my computer, and organize everything into a big spreadsheet.

Keeping track of your cash is a little harder. The best way to do it is to just suck it up, and do it. Carry around a nice notebook (I love this one, it's a classic), and whenever you spend cash, make a note, just the amount and what you bought.

These make me feel so classy.

These make me feel so classy.

The point of all this isn't actually to torture yourself with a complex guilt trip. The idea is to get a firm grasp on where your money is coming from, and where it's going. Tracking your incoming cash gives you a good sense of exactly what money you receive every month, and when. This may sound like something you should already know, but some people are a little hazy on what their after-tax earnings are, or which day of the month or week money is magicked into their accounts. This is good information, so track it. Tracking your spending is a more sobering experience. When I started tracking, I was like, "I spent HOW MUCH at Sephora??!" and "Why haven't I purchased shares in Taco Bell, since they are TAKING ALL MY MONEY!"

Hopefully, your journey will be less shameful, but probably it won't (heck, it might be more shameful - "I spent how much at the Local Adult Novelties Store?!"). The point is that only once you know exactly what is happening to all the money that comes into your life, you cannot hope to have a healthy financial life. So, start with tracking, and we'll take it from there.