Information is Key to Financial Freedom
When it comes to the all to elusive goal of financial freedom; information is key!
Some of you may be scratching your head and saying I thought income and spending less than you brought in was the key? It’s a large part of the puzzle but if you aren’t managing your funds and tracking where they are going how will you ever patch up some leaks in your financial “ship”?
Knowing where your money is going, not going and how much you have at any given time are all key to being financially successful. It’s easy to spend like an idiot but still think you’re doing ok until that credit card bill or unexpected car repair smacks you into the poor house if you haven’t planned. Even if you have a huge nest egg if you spend without recourse you won’t keep it for long as chances are you had a different mental attitude when you amassed the funds compared to when you depleted them.
In 2001 I used to track all my income, expenses everything to the dollar almost. Whenever I’d receive change I’d write it off as rest in change. Change was the only thing I did not account. At anytime I could have a graph / pie chart showing me where my money was, how much was coming in, out, what my major expenses were etc. Since building a good cushion I stopped using the same techniques I had originally and what should not be to my surprise my funds have depleted.
It’s easy to spend $5, $10-$20 here and there and if you don’t keep track you really have no clue how much you’ve wasted. I’m starting to track all my income/expenditures again. A huge bonus of doing this is that since you have to mark it down you’re less likely to spend impulsively and by following you will only have 1 month of total shock. You add up your lunches for the month and boom $200+ or other expenses that are draining your account; you may have 5-10 that equal $50-$125 a month… That’s a lot of money when you add it all up.
Point of this post is track your funds if you wish to be in charge of them. A fool and his / her money shall soon part is true. If accumulating money and holding onto it was the path of least resistance in this world we’d all be rich on beach somewhere wouldn’t we?
You should keep money to one side for insurance incase of unforseen bills, but you can still be wise even in these occasions, does the bill need to be paid now? Can you change suppliers to lessen the bill etc, finding new ways of saving money is just as important as knowing where the money goes.