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Why Recording Your Transactions is Important

By Charles Hopkins Published 09/19/2006 | Entrepreneur

When you are working on building an empire, handling small details, such as recording each and every transaction, can seem like a time intensive task. It certainly can be, but the benefits gained from taking the time to do this can be paid back in profits tenfold.

There are a number of reasons why recording your transactions is so important. The first being that when you keep close track of all of your transactions you are ensuring that you know where your money is coming from along with where its going to.

Most people who are earning in excess of a million dollars per year are doing so through multiple income streams. They are utilizing several different methods of making money to guarantee that they always have some income filtering in. For these people, keeping track of the transactions for each business helps them to see where most of their money is coming from along with what is costing them the most. They can use this information to fine tune their business strategies which will aid them in making even more money.

Its also extremely important to keep a close eye on what you are spending your money on. Many people simply spend money without realizing that they have less than perfect spending habits. If you have no idea where you are spending money it becomes much more difficult to make a budget and stick to it.

Yes, even millionaires have a budget. If you slide through life without one in place you are much less likely to become wealthy. Setting up a budget isnt a difficult task. The part of the process that most people struggle with is sticking to the budget. Its important to make a concerted effort to follow it once it is in place. It can be the difference between having a small fortune and living paycheck to paycheck.

Before you do establish a budget for either personal or professional use, track your spending habits. Record all of your transactions for a months time and study your findings. Youll see where you are spending too much money and where you may be directing more funds. You may be surprised to see how much money you are spending on items that arent really essential.

The most important area where youll want to record transactions is in relation to your banking. With the introduction of the ATM and check cards, recording each and every transaction is often overlooked. However, banks do make mistakes and they are not often known for correcting them on their own. You need to keep close track of each transaction you make, whether its a deposit, a bill payment or a check youve written.

Also follow the same philosophy with your credit card statements. Take a few moments each month to examine the transactions and ensure that no one has made a mistake. Some may call it being too careful or frugal, but if its your money, you are the only one who will be keeping an eye on it.