May I have a receipt?

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As tax time approaches, I unlike many others actually enjoy the preparation of my tax return. The simple trick is save _every_ receipt and use a reliable budget or expense reconciliation method. Yeah, I know that vendors look at you crazy when they have hastily taken your money and given you the goods which you've just purchased, but actually a receipt should always be part of every transaction. Regardless of what is being sold (snacks, coffee, water, etc). These knick-knack items add up and almost all of them are not fixed costs, so they can be controlled.

If you get into the habit of collecting receipts for everything you purchase, it becomes quite simple to track and plot your monthly expenses. So when tax time rolls around and you must produce accurate records for your accountant or for some simple tax program, you do not have to guess about about itemized deductions. Hell, you don't even have to claim mystery children or other foolishness.

The tracking system need not be very complicated at all. A simple spreadsheet will suffice. Just make sure that you have some sort of accordion, tabbed folder which list all of your monthly expense categories (ie dinner, lunch, home furnishing, gas, groceries, etc). If you're really sophisticated, you can run a program like GNUcash or some other financial software to help track your annual expenses and help you manage your small business expenses. I suppose the beauty of all of this is that you can begin to see trends and even find that _extra_ loot that you thought you have been missing. The extra loot can then be diverted to money market or CD. Perhaps you could then use some of this money to finance your next overseas vacation.

Bottom Line: If you think of your financial health as a Fortune 100 business, you will be more likely to take an aggressive approach to cost savings and waste reduction. Frugality becomes a learned behavior.

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    About this Entry

    This page contains a single entry by AG published on February 9, 2007 6:50 AM.

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