The one thing you have to do if you’re serious about saving money

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More Americans today realize the importance of saving money than ever before. But new numbers indicate that a lot of people aren’t putting that knowledge into practice.

Recent figures from the Commerce Department show that consumer spending rose 0.4% and savings fell in December to $351.6 billion, a level not seen since December 2007, according to Reuters.

With that in mind, overspending is something we all should be cautious of. Before we can put together a workable budgeting plan, the very first thing we need to do is come up with an effective way to keep track of our spending. While the term is not so much in common use anymore, it’s called “ledgering.”

How to create a ledger & why it’s important

Ledgering is the time-tested practice of writing down your monetary transactions. If you don’t think it’s important, imagine the amount of money customers give away each year in insufficient funds fees, which are very profitable for banking institutions.

Ledgering is the linchpin of proper financial management — and an important first step in saving money.

Back in the day, when you ordered a check book, it would come with multiple-page ledgers that consumers could use to record their spending. They were ideal for extensive budgeting and balancing your account.

While many checkbooks still come with small ledgers, today, banks are more likely to steer you online to manage your account: When you log into your your bank’s website, it will usually feature an interface that includes a “transaction register,” which shows your account activity.

While that digital feature is a convenient online tool, there are several personal finance apps like Mint and Personal Capital that do a good job of tracking your money, as well.

Online, banks have also figured out a way to split personal finance, including ledgering, into a buffet of notification services: low balance alerts, bills due alerts, unusual activity alerts and even alerts letting you know that your end-of-month statement is ready. And while these all come in handy, you still need to “mind the store,” as they say.

3 characteristics of a good account ledger

Here are a few things every good account or checkbook ledger (and budgeting app) should have:


A running and accurate balance: If you don’t know how much money you’re working with at any given time, what’s the point? If you choose to keep a manual ledger, always add or subtract from it in a timely fashion to stay accurate.

Transaction dates: There’s nothing worse than paying money from your account, but not knowing when it will be withdrawn or — worse — losing track of when you made a certain purchase. Recording dates, including when bills are due, is the best way to accurately reflect your account activity.

Transaction description: To be thorough, you’re going to want some information as to what exactly a particular charge is for. You should always jot down a brief description of the transaction so as not to get confused when looking at your account activity over a given period. If you choose to use a budgeting app, make sure your account activity includes descriptions of the things you buy.

Money expert Clark Howard is a big fan of, which helps track your finances through an app. He says while there are inherent risks associated with any online financial tool, the benefits of Mint outweigh the concerns.

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