Your personal finances are your business. If you fail to treat them as a business, you may struggle just to keep your head above water, or worse, you could drown in a sea of debt. I have met successful business people that worked very hard to achieve significant income, yet still scratched their heads at the end of each month wondering where all the money went. They were organized goal-setters in running their business, but they seemed to leave those qualities at the office, as their personal finances were in disarray. Whether you are a businessperson or not, those two things - organization and goal setting - will serve you well in your quest for financial success. Let us now examine those two things in more detail.
Daily Diligence
Your financial success is not going to achieve itself. You must pay attention to it, monitor it, even goad it into being. This means that you must hold yourself accountable for the state of your finances every day. Here are three tips you should employ daily:
Eliminate unnecessary spending. Brew your own coffee, cut down or quit smoking, clip coupons, and go out to dinner only on special occasions. There are likely many other ways specific to you to cut out the waste.
Increase earnings. If you are deep in debt, you may consider working a second job for a while. Also, try to make yourself more valuable in your primary job, and ask for a raise.
Perform a daily assessment. Before going to bed, mentally review your day. Ask yourself where you went wrong, what you did well, and where you can be better tomorrow. Another good idea is to keep a notepad on your night table so that you can write down your ideas for improvements to your household finance and implement them the next morning.
Monthly Budget
A good, well-maintained monthly budget is the cornerstone of responsible personal finance. In the beginning, you should be as detailed as possible. Gather all your pay stubs, bank statements, and bills. Save the receipts from all of your cash purchases for at least two months so you can see what your spending habits truly are. You will probably find some surprises about yourself.
Now that you know what your income and expenditures are, you can begin to set goals. Your mortgage, car payment, and cable bill do not change from month to month, so you do not need to set goals for them. Or do you? It may be a good idea to try to negotiate with your creditors to get a better deal. Additionally, you may decide you can live without the premium television channels. Your other goals will have to do with potential increases to your income and the elimination of wasteful spending. If you want your money to stay, you must always be conscious of where it goes. Above any other tool or technique, maintaining a budget with aggressive yet realistic goals is easily the most effective. Tragically, this crucial step is often ignored. If you crave financial success for your future, you must put together a budget; keep in mind that someday you will be able to pay someone to mind that budget for you.
Financial Statements
"I'm broke" is a financial statement, but not of the type that we need to discuss here. For our purposes, a financial statement is a document that shows your assets and liabilities. Subtract your liabilities from your assets and the result is your net worth. Every individual or family should complete a financial statement on a regular basis. A good rule of thumb is to do one every three months. This will help you keep track of how you are doing on the financial front, and give you a basis from which to set ever higher goals. You can find ready-made forms on financial software programs or by doing a simple web search.
Good businesses are grounded in a high degree of organization and positive goal setting. Do your personal finances deserve any less attention? A daily assessment, a monthly budget, and quarterly financial statements - all are organizational tools designed to give your goals a framework, and all are easily accomplished once you get them started. Do not hesitate. Your financial future needs attention now.
Fletcher Harris regularly contributes articles on eliminating credit card debt. Mr. Harris has personal experience with debt, and he has spent years studying personal finance and debt management in an effort to help people currently engaged in the battle against credit card debt.
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