Sometimes, it is necessary to step back and revisit the focus areas – be it in life or in a blog. This blog is dedicated to helping people better their quality of life by making small improvements in their lives. Work, finance, self-development are usually what I write upon. The timing of these usually tends to parallel the area where I am working on, so that it is also a chronicle of my efforts in becoming a better person today.

Do you have a situation where you are left wondering where you spent that Rs. 5000 ($100) and finally put it under the GOK heading? Then this post is for you.

GOK=God only knows

In many countries around the world, cash is still king. I am not talking about Business Strategy, but at a more personal level. While plastic has become the de-facto method of transacting, cash is still important, especially for purchases and deposits below a certain amount.

In India, for example, you cannot use a card for payment, except for fuel purchases, unless the bill comes to INR 300 ($6). Therefore, when making multiple small purchases like a can of coke or stationery, you have to use cash, typically drawn out from an ATM. This can lead to “money leaks” – a state where you cannot account for money when you are looking at your monthly statement.

In 5 easy steps to find out where your money is going, we looked at going through your bank and credit statements and then setting up categories for your spending. This is possible only when you know what you spent the money for! If you have a series of cash withdrawals, without any corresponding attribute/bill, you cannot effectively track your money. Meaning, you cannot budget effectively.

Here are some tips to help you prevent such money leaks:

1. Add a “payment method” column

Add a column to your budget tracker named “payment method.” As the name suggests, you can put in how you are going to pay this item – through card, cheque, bank transfer or cash.

2. Consolidate Cash items

Withdraw enough cash to cover all the total cash items and divide them using the Envelope Accounting method. This will prevent you making ad-hoc withdrawals from Automated Teller Machines (ATMs) during the month. Once you pay the bill, mark it in your budget-tracking system.

3. Track your micro-purchases

This is possibly the most difficult part – tracking your small purchases  – the coffee with a friend, the quick pizza while waiting for a train types. Don’t sweat the small stuff, though, unless you are penny pinching!

In your mobile or in a pocketbook, jot down the expense under broad categories for the expense, such as food/fuel/book/transport etc. Transfer this to the budget as soon as you get your computer.

Remember to plug this information back into your analysis of spending, to get an idea of such expenses.