Knowing Where The Money Goes
“Suppose you want to build a tower. You would first sit down and figure out what it costs. Then you would see if you have enough money to finish it.” – Luke 14:28
The idea of having your financial audit is to know the outflow and in-flow of your money so you can adjust your lifestyle. It is highly recommended that you have a list of incoming and outgoing flows of your money. That way, you will find out which of this outgoing (expenses) that you can reduce or totally stop.
PATCHING THE LEAKS
Just like having a leak in your kitchen sink, the first thing you’re going to do is to patch the leak to minimize the damage the water can bring. Once patched, you will call a plumber to fix the problem. You should find those leaks to reduce the damage on your financials.
Looking at my bank account, I saw those little amount deducted, ranging from $10 to $60. These are amounts that I paid for charges. Every time, there is an automatic payment that should be paid, but since there is no fund in the account, the bank will charge you. They did not cover the automatic payment, but the bank collects a charge. That adds insults to your growing financial problem.
CHECKING ACCOUNTS AND DEBIT CARDS
I decided to close some checking and debit account and use only one. This action simplified my monitoring of my incoming and outgoing money. In addition to my checking and debit account, I keep two savings accounts – first, for the emergency fund that I am building; and second, for the payment of my debts.
Try to make all your payments using checks or debit card. Shops nowadays accept payments using debit card even for small sum. This way, all the financial transactions you are doing will reflect on your bank account movement.
KEEPING A SPREADSHEET
Keeping a spreadsheet is very important. You can use Microsoft Excel or Google Sheets which you can now access both of this software for free. With your spreadsheet, you can monitor the movements of your finances up to the last cents. Once you filled up the incoming and outgoing in a separate column, you can easily visualize if you had spent more or spent less than your income. If you are spending more than your income, you must find ways to cut or reduce a certain expense by verifying your spreadsheet or you must know how much more money you will need to work for to break-even with your salary and expenses.
Once you have a clear picture of your incoming and outgoing flow of your money, you can choose if you are short, break even or saving some part of your money. You can study further which expenses you are going to stop.
There you go.
JUN PASION – Online Entrepreneur