They say that it’s not how much money you make but how wisely you spend what you have is the key to financial success. We’ve all heard of people earning boatloads of money becoming bankrupt, right? The thing is, when everything seems to be going right financially – your earning steady income – most people don’t take the time out to plan for the future. And they continue to lead lifestyles as if money will continue to come regardless. Waking up one day to realize that it doesn’t can be your worst nightmare.
With that wake up call, the time to watch where your money goes is now. Take a timeout from your busy life to sit down and look at your current financial situation. First, how much are you earning? If you have a regular job, this isn’t too hard to do. Next, write down all your financial liabilities – mortgage, loans, credit card payments – everything that you need to pay in a given month. Then you subtract this from your earnings. What you have is a picture of your current financial health. Now you’re looking at the big picture. What you see will determine what you need to do next. Just two possibilities, one – your fine, you still have a few grand to spare, good work. Two – your seeing red there but don’t panic. Knowing where you stand now is the first major step towards financial success.
With your current financial situation in mind, you should then look at your spending habits. Keep tabs on your daily spending for a week. Write down everything that has to do with you spending. Be conscientious. After a week, take a look at how wisely or otherwise you have been with your money. Chances are you’ll realize how much you can cut down on those tiny purchases you can live without. If that isn’t apparent at first glance, take each item one by one and ask yourself if that purchase contributed anything of value to your life. Your fifth cup of Starbucks coffee at noon certainly did look like too much at second glance, right? How about that taxi ride down three blocks? Hmm. I think you get the idea. If you are spending way above your means, it’s time to control your spending. If you are left with some after paying off all your debts, congratulations and you can now start looking at savings and investment plans that will suite your current money situation. Either way, it starts with you and your habits. Realizing the fact that you need to work on your finances and following through with concrete steps to do better will ensure that you won’t have to worry about your finances from now on.