Tracking Your Spending
Knowing how to manage your finances successfully is an effective way to earn even more money. In fact, when you manage your finances correctly, you stand better odds of reaching your goals for financial freedom faster than you have ever imagined possible. You may think that you know where your money is going each and every month, but until you learn how to track your spending effectively, you actually may not have a clue. Only when you track your spending do you learn the bitter truth of the frivolous spending that is taking its toll on your plan to create wealth.
It is possible to determine where all of your money is going when you track all of your spending over a certain period of time, at least one or two months minimum. In order to do this with positive effects, you need a small notebook that you can keep with you at all times. In this notebook, you need to write down every single expense, no matter how great or small. Then, use the data that you collect to create a monthly budget and take better control of all of your spending activities.
Identify each expense, again even the tiniest expense counts, and determine where you can make the most effective spending cuts. Every dollar that crosses your hand is going in one of two directions, in your pocket or someone else’s. The key to wealth creation is to ensure that every dollar that crosses outward comes back with even more income. Every dime that you save is more money that you have and more wealth that you create.
Another important money management skill that you must learn is to prioritize. Look at the items on your spending list to determine which are the most important to your life and well-being. Do not waste you money on the things that you do not need, instead put a couple extra dollars toward your savings, allowing you to make wise investments that eventually build even more wealth.
If your checking account offers unlimited check writing free of charge, then you may want to consider writing checks for every purchase over $20. This will help you keep up with all of your spending better. In addition, if you have to take the time to write a check and then feel the loss as you deduct it from your bank book, you will be less likely to roll out the dough.
Sean Rasmussen
Success Communicator
Aussie Internet Marketer © 2004 – 2010
Tags: Build Wealth, Create Wealth, Financial Freedom, key to wealth creation
June 18th, 2010 at 11:57 am
Learn to love Excel. Unless you have the funds to obtain special accounting software, something simply as Microsoft Excel will allow you to track line-by-line every expense that you incur. This way you can easily identify at the end of the day, week or month where your spending is going and what actions you can take to eliminate the unnecessary.
June 22nd, 2010 at 1:17 pm
Exactly Cemil, no matter what way you record your spending, it’s important to make sure you do record it so you can locate areas where you can save, or areas where you are spending money unnecessarily.
June 25th, 2010 at 3:59 pm
I actually watched a snippet of a finance show the other day where the presenter (who is fully qualified) even suggested that people use the good old show-box to collect all of their receipts, expense reports, etc.
Found it so funny that he was suggesting using such a means. But then again it’s better than nothing.