How To Budget: Tracking Income, Expenses & Balance

An effective budget will track three broad pieces of information: your income, expenses and balance.

There is also a second order of information that your budget will track which will not only give you a more comprehensive picture of your finances, but also a deeper understanding of just what comprises your bank balance.

The key point to remember here is that the reason to apply this type of framework to your money is so that you can understand your financial situation as described by your balance, rather than just assessing your situation by observing a number in an account.

It is like the difference between looking at the cover of a book and actually reading the book!

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