Interpretations and Author's Views

Personal Monthly Accounting – A guide to record and optimise your savings

In his book ‘How to Fail at Almost Everything and Still Win Big’, Scott Adams – the creator of Dilbert, says that there are some skills in which every adult should gain a working knowledge. One of the skills he mentions is ‘Accounting’. 

The word ‘Accounting’ itself sounds so boring that most of you might’ve fallen asleep. Scott Adams calls it a ‘bubbling moat of boredom’. As a Chartered Accountant, it makes me think, is ‘Accounting’ really that boring or is it because we don’t know the benefits of using it in our personal lives? 

The word ‘Accounting’ is always associated with companies. We always speak of accounting as an activity for businesses. Through accounting, companies record transactions and maintain their books of accounts. At the end of a financial year, these books of accounts are used to prepare financial statements. Financial statements are nothing but the report card of how a company performed in a year. A comparison of financial statements of different years gives a detailed analysis of how the company performed. 

Are you already deep asleep? Let this flowchart wake you up. In a nutshell, this is the flow:

So now the question is, why can’t we apply the same concept to our personal incomes, expenses and investments? 

Right from childhood, I’ve seen my mother ask my father to give her a monthly fixed amount to run the house. She would then use the amount to incur various expenses. At the end of every month, if I would ask her for money, she would reply – “Papa ko bol ghar ka kharcha kam padh arah hai.” (We’re running short of money this month. Tell your father to increase the allocation for household expenses)

Story of almost every house!

But wait, what did the term ‘household expenses’ include? Because at times the fixed monthly amount would be sufficient and at times it would fall short. How much were our entertainment expenses? How much did we generally spend on transport or education? 

There was no record whatsoever as to where the amount was spent, so we could never determine the real reason why we would fall short even when the budgeted expenditure was more than enough. 


Personal Monthly Accounting (PMA) will help us record our personal and household expenditures. Like businesses classify various expenses under different heads, we should be able to classify all the monthly expenses we incur as an individual or as a family. 

It is an accounting mindset that can be used to record your incomes, expenses and investments. It will give you a clear picture of how you are spending your income; are there any wasteful expenditures; how can you optimize your savings. 

To be able to optimise our savings, the first step is recording our incomes and expenditures. So, for each of you, I’ve created a template. The template is a rational template for incomes and expenditures. 


There are three basic and easy steps to it:

1. Record your incomes

Incomes would include everything that you receive in your bank statement(s) and/ or in cash. The generic heads would be income from salary, business, professional practice, savings account interest, fixed deposits interest, dividends, gifts, etc. Go on a recording spree and record all your incomes.

This should be done monthly so that you create a habit, it’s easier to keep a track, you’re in control of your finances. 

2. Record your expenses

The main purpose here is to both record and classify your monthly expenses. It will give you a true and correct picture of where you are spending the most. If necessary, you can optimise your expenses under different heads. For instance, if in a particular month your entertainment expenses have skyrocketed, you can cut those short in the next month. 

Expenses have been classified under the heads, home expenses, transportation expenses, daily living expenses, entertainment expenses, health-related expenses and other expenses. 

If you’re buying an asset, the cost of using that asset should be included in your monthly expenditure. Assets would include any costly item that you intend to use for more than one year (except house in this case). For instance, furniture, television, vehicle, mobile phone, laptops, etc. Cost of using the asset is the cost of the asset every month. 


Say, you bought a TV worth Rs. 60,000 and it is intended to be used for a minimum period of 5 years. 

So, the cost of using the TV for one year would be Rs. 60,000 / 5 years = Rs. 12,000 

The cost of using the TV for one month would be Rs. 12,000 / 12 months = Rs. 1000

In the template, the cost of using the TV will be Rs. 1000 every month from the time the TV is purchased up to the completion of 5 years. 

For the cost of the house, the EMI will be entered under the head ‘Rent/ Monthly instalments’. Whereas the cost of the house (including down payment) will also be shown under point 3 below ‘savings and investments.’

This should be done monthly so that you create a habit, it’s easier to keep a track, you’re in control of your finances.

3. Record your savings and investments

Having a record of your savings and investments will always keep you aware and will lead to effective use of resources. You can identify better avenues to invest but until and unless you don’t have a record of your savings and investments in front of you, how would you use your money effectively?

At least a list should be maintained every 3 months (quarterly) to know the status of your savings and investments. 


Once you begin recording, it is very easy and you will reap the benefits. You will have all the data to analyse and make better-informed decisions relating to your finances. About the template that I’ve created, it is a rational template for recording your incomes, expenses and investments, not a customised template for each one of you. However, it has been made considering everyone, so you will definitely find it useful. 

Download the template here (and if you like it, do comment on this write-up)

7 Replies to Personal Monthly Accounting – A guide to record and optimise your savings

  1. People only face problems because they dont know where money is going. Its bit tedious to keep records, but looks is first step to start with. Thanks for interrsting article.

  2. Very convincingly put up and explained.. 🙂
    Nicely done on excel sheet!

    Keep it up and eager to learn more 😊

  3. Very helpful video , I am in the habit of saving for a long term goal but that amount is not fixed , after watching your video I get an idea of saving consistently . Thank-you for the great content .

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