This is the first step because it makes everything else possible. What is measured can be improved, and studies have shown that even corporate executives who look at financial statements everyday tend not to know their own personal financial situation. You must know where your money comes from and where it goes, what assets and liabilities you own, and how your current performance lines up with your financial goals. Very few people have the accountant like skills necessary to do it themselves and so to those I recommend hiring someone to do their book-keeping. Having a professional CPA or other accountant available to you will prove to be wise in more than just the tracking of your finances. In this modern world there are also a variety of good software programs designed to help keep you on track without causing to much of a burden. Recently Intuit, the maker of Quicken & Quickbooks software, acquired a fast growing online service called Mint.com Mint.com is a free service that will automatically download all your transactions from your various bank accounts and credit cards. It will designate a spending/income category for each transaction and generate reports for you. Mint.com also has mobile apps to facilitate the mobile tracking of your finances. You can also setup financial goals within the Mint.com software that will assist you in achieving some of your goals . Whatever method you chose you must find a way to generate a report that shows your monthly spending in each expense category, your monthly income, liabilities, etc. Once you have a handle on your own finances the true work can begin.