Where's my money?

A simple exercise: Calculate how much you have earned till date (including your salary, gifts, return on investments and all types of income). Just an approximate amount would do. Find out how much money you have in your savings (SB accounts, any other investments like stocks, Mutual Funds, etc). How do you find your savings with respect to your earnings? Are they substantial or very meager?

To drill down, calculate how much you have spent till date. Start with all your major expenses (like education or buying a vehicle/house/site). Find out how much you approximately spend monthly on other things like fuel, snacks, dining, clothes, telephone bills, etc. Put all of these together and get an approximate amount of how much you have spent so far (after you started earning).

Then do the math, "Calculated Balance" = Earnings - Expenditure. Are your actual savings same as the "Calculated Balance"?

If yes, congratulations! In most cases there will be a noticable big difference between the two. If so, where did your money go? Hard to explain!

I was in the same situation about 3 years ago. I had worked for over 2 years and I had a relatively small balance in my bank account (equivalant to about 2 months of my salary). My father helped me realise this. I started wondering where all my money went. I calculated all my major expenses and did the same exercise I explained above. I could account for about 60-65% of my expenses. Where did I spend the rest? I had no idea!

In order to prevent such accounting anamolies, I started keeping tabs on all my transactions, income and expenses. I started using a personal finance manager and found it very helpful in managind my money and accounting for it. In the past 3 years that I have been using GnuCash and KmyMoney I have been able to account 98-99% of my money.