Ever wondered where all your money went after you received your payment of salary?  This experience is not limited to salary earners. Individuals engaged in personal business also experience this dilemma.

This brings to mind an experience while growing up. My mum was tired of starting a new business, making good profit, but always having this problem of ‘unexplainable cash disappearance.’  At some point, she would jokingly say it seems some mysterious powers are stealing her profit. Have you had similar experiences?

For anyone who is superstitious, such conclusion would sound reasonable. But it really is not. I challenge you to prove me wrong.

The logical explanation for this is that most people failed to keep track of the amount coming in as income, and how they spent this.

While not follow these simple steps to see where all your money goes.




1. Paper and Pen: This is all you need to keep track of your income and expenses. To go techy, there are numerous computer applications and mobile apps, designed to do this job also. Eg. Expense manager, expenditure, and daily money app. For a beginner, I strongly recommend you use a simple paper and pen to keep your records.

2. Make Entries: For the whole period of the month, dutifully record all income you received as well as expenses you made during the month.

3. Classify: At the end of each week or the month’s end, seat back and analyse or categorise all your expenses into the various categories you think appropriate.

4. Variance Analysis: Now compare the totals under each heading with your set budget for each month. Note any areas of variance and review the reason for spending above your set budget.

5. Commitment: Since the goal is to spend within set budget, and to reduce expenses ever time, thereby giving room for more funds going into savings and investment, be committed to the above processes and monthly review your level of commitment.

The above is the essence of bookkeeping in personal finance. Following these simple steps will not only ensure you know where all your income is going; it also arms you with a tool to plan for financial freedom.