Mon 4 Feb 2008
Here we go with Personal Money Management for Wealth Builders - Part 2:
Part 2 is closely related to our previous post, “Creating a Budget” and can be summed up in one short sentence:
Account for everything you earn and spend.
This is simple common sense. Good accounting helps you see where your money is going, which in turn helps you use it in the best ways possible!
For example, if you see that you’re spending a disproportionate amount of your income on meals out, you can decide to cook more at home. On the other hand, if you see that you have room to spend more on meals out, you can make the choice to do so - or apply the money somewhere else. Save it, invest it or add it to your business accounts, tithe it, apply it to household expenses, or anything else that makes good fiscal sense. The point is, you’ll have the money to do it!
Getting started
Keeping a basic record is as easy as buying a notebook and recording your incomings and outgoings each day. It’s very helpful to learn from someone who knows about creating and maintaining an effective budget, so if you’re able to consult with a qualified financial advisor then by all means do so.
I also recommend using good budgeting software such as Quicken. This company has been around for a long time, for good reason: their products are outstanding and very reasonably priced. The money you save and build by using them will pay for them many times over! If you’re just getting started and want to track your expenses, check out Quicken Starter Edition 2008:
If you’re a bit more established in your finances but could still use a great tool for managing your budget, have a look at Quicken Deluxe 2008. This is the latest version of the “classic” Quicken that has helped many thousands of people enjoy greater wealth by managing their finances more effectively:
Another option is Quicken Online. This version doesn’t install on your computer; it’s all run through Quicken’s secure servers. This option is extremely cost effective and great for new users. It’s free for the first month and just $2.99 per month after that. Outstanding value!
Quicken offers other products as well, all of which are excellent. There are many applications available. Check out their website!
Of course, as your wealth building efforts begin to pay off and your income increases significantly – not to mention the added complexities of business accounting – a good accountant can be worth his or her weight in gold. However, to start with most of us have to do it ourselves… and that’s where software can really simplify the process.
It’s not hard!
Regardless of whether you use your computer or do it by hand, the key is to get started and do it consistently. Simply record your income and track all of your outgoings. Save receipts and add them up. Print summaries from your bank accounts. Compare what’s going in to what’s going out, and observe where your money’s moving. Look at how and where you can improve your spending habits and make adjustments if needed.
Accounting for everything you earn and spend, especially curbing your spending when necessary, can take some discipline at first. However, I think you’ll be surprised - perhaps even shocked - at how much extra money you can gain from it!
A dollar or two here and there can add up very quickly… and before you know it you will very likely have a lot more money to apply to your wealth building activities. We’ll get into those activities in coming posts!
