What Matters Is That You Know Where Your Money Is Going

Category: Finance, Credit.

"A budget is telling your money where to go, rather than wondering where it went. " C. Hoover.

If I were to ask you how much of your income do you save, how much do you spend on groceries, how much do you spend on gas, how much do you spend on clothes, how much do you spend on vacations, how much do you spend on gifts, how much do you spend on uninsured medical expenses, could you give me an answer quickly? Anyone who has ever run a business knows that what gets measured is always improved. Would it surprise you to know that most rich people can give that answer quickly? You have to look at your personal financial situation as your own personal business. And most importantly, you need to know whether you have a profit( savings) or a loss( new debt) . You need to know how much revenue is coming in every year in your business, and you need to know what your business expenses are. Tracking your spending doesn' t have to be anything elaborate.

You could use Quicken and download all your transactions from your bank account and your charge card. You can use a simple index card system. You could create an Excel spreadsheet. The system doesn' t matter. You could devise a system of your own. What matters is that you know where your money is going.

They are certain that there is just no extra money in their budget at all. It amazes me how often I meet people who tell me they can' t save any money. However, once they start tracking their spending they learn that they spend$ 400 or$ 500 or even$ 600 every month for lunch, for restaurants and for trips to Starbucks. 30 years from now do you want to look back and say you went to every great restaurant in town, or would you like to be worth millions of dollars? I hate the word budget. It is completely your choice. For most people it is in the exact same category as diet. Change your thinking.

I can' t have this, I can' t have that, I' m deprived of this, I am scraping by on bare subsistence. Tell yourself that you are going to track your spending because you intend to be rich someday. By writing down everything that you spend, you can look at it once a month and decide if your spending is in line with what is important to you. You cannot manage what you cannot measure. I love to travel so I want lots of money available for terrific trips. All the money that I save by not going to restaurants or by going to less expensive restaurants adds up to the money I need for my trips.

I could care less about eating, so my restaurant budget is very nominal. Start telling your money where to go rather than wondering where it went.