Y ou don't have to sort through stacks of paperwork to straighten out your finances. All you really need is your checkbook and a calculator to create a valuable financial-planning tool. The reality is that when you keep good financial records, your checkbook can reveal your spending habits and help you determine whether you are likely to achieve your financial goals.

Evaluate Your Spending Habits

Record all of your financial activities in detail. Be specific about why you wrote a check or withdrew cash. Many people simply enter into their checkbooks the names that appeared on the checks without indicating the purpose of the payments. Recording more detail will help you determine where your money is going. You'll probably need more room than the space provided in your checkbook, so use a notebook.

Review your checkbook at least once a week to see how you spend your money. Look for excessive credit card spending, frequent cash withdrawals and unnecessary purchases. Once you take note of how you spend, change your habits to save money and attain your financial goals.

Analyze one month's checkbook transactions. This will give you a basis for future transactions. What to do...

Calculate your monthly take-home pay by dividing your annual net income -- after deducting contributions to retirement and savings plans -- by 12.

Strategy: Your monthly take-home pay should become your spending ceiling.

Review fixed costs that you incur each month. These include rent or mortgage payments, utility bills, loan payments and commuting costs.

Strategy: Set aside enough money each month to pay your total fixed costs.

Review periodic costs that you pay several times a year. These include insurance premiums, automobile repair bills, estimated tax payments and vacation costs.

Strategy: Add up or estimate your total annual periodic costs and set aside one-twelfth of the total each month. Keep the money in a money market mutual fund or another type of low-risk, liquid account.

Building Personal Wealth

Once you've reviewed your spending habits, use other checkbook-based financial strategies to build personal wealth. Typical problems...

Problem: High checking account balances. When you accumulate too much money in a non-interest-bearing account, you forfeit interest income.

Strategy I: Keep your checking account balance high enough to cover your spending needs, and invest the remainder in no-load mutual funds.

Strategy II: Link all of your other bank accounts to your checking account with your ATM card. This will make it easy to transfer money between accounts. Then you can move cash into your checking account as you need it.

Problem: More than three cash withdrawals per week. Besides incurring excessive ATM fees, too many cash withdrawals may mean that your weekly spending is exceeding your weekly cash spending budget.

Strategy: Limit yourself to one weekly cash withdrawal. Take out only what you've budgeted for the entire week's worth of expenses.

Problem: Income tax refunds of $1,000 or more. Too high a refund means that you are making an interest-free loan to Uncle Sam.

Strategy: Raise your personal exemption amount to increase your take-home pay. Use the extra money to reduce high-interest credit card debt or invest it.

Problem: Total debt payments exceeding 36% of income. Bankers use this rule of thumb to evaluate whether borrowers can repay loans.

Strategy: If your debt is too high, decrease your spending and pay down your debts, beginning with the highest interest rate -- usually credit cards.

Problem: Monthly payments to more than three credit cards. Two or three credit cards are plenty for most people. If you have more than that, you may be paying unnecessary annual fees.

Strategy: Cancel unnecessary cards.

Problem: Outstanding balance on overdraft protection for more than two consecutive months. Overdraft protection should be used as a safety net to fund short-term cash crunches -- not to fuel spending in order to meet long-term financing needs.

Strategy: Reduce your expenses and pay off your overdraft line of credit to reduce your interest expense. Then cut your expenses on an ongoing basis to better balance your finances.