Seven Secrets to Money Success - Number 5.

Understand the detail of your finances.
Many people tell me that they are BIG picture people. They keep an overall idea of what’s happening in their finances but then have no idea of the detail of their finances. I love to ask these people what their income is. Normally they know this exactly. Then I ask them what their expenses are for the same period and they don’t know. Often they give me a figure and when I subtract it from the income figure they’ve given me it becomes obvious that they have left out quite a few expenses. If you have ever been on a diet or worked with someone in this area they will ask you to fill out a food diary for a period of time. This is because we are often not aware of what it is we are eating and when. Filling out a food diary gives you an opportunity to make sure you are honest about what you eat and without a correct record it is impossible to make any headway with a sensible diet that can control your weight. Getting an idea of your expenses is exactly the same. Until you honestly record them for a period you will have no idea where your money is going. Like the proverb says, ”Your money can be gone in a flash. As though it had grown wings and flown away like an eagle.”
Some people are happy if they have a little money left in their bank before each payday. They think that this is going to one day make them wealthy. But think about this. If you were unable to account for $10 each week, in a year this would $520 and over a working lifetime of say, 40 years, would equate to $20,800. That is the value of a small car just frittered away over a lifetime.
Let’s say you are trying to lose weight which is why you decided to fill out a food diary. The weight would come off gradually kilo by kilo. You wouldn’t wake up one day and suddenly have lost 10kg overnight. Also, you would make measurable changes to your diet which would make sure you didn’t starve but at the same time you lost weight.
So it is with controlling your expenses. You need to know what they are IN DETAIL. Near enough is just not good enough! Because it is the gradual small changes that you make which allow you to have an enjoyable life as well as getting ahead financially. No one wants to go on a crash diet with their expenses. Thinking that to get ahead you have to stop spending totally! So understanding the detail and planning sensibly will allow you to get ahead and have a life as well!

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