Taking care of what you earn

Taking care of what you earn
07 August 2013

Do you ever stop to think where your money goes?  A friend of mine told me this week that people don’t have time to manage their money, they are too ‘consumed’ with work and by the time they get home too tired to deal with something so ‘trivial’ as money.

Isn’t that incredible? The very reason most of us go to work is to earn money, yet to deal with it and to manage it effectively is too trivial or we find it too boring a subject so we procrastinate and don’t deal with it in a way that is in our best interest.

Just stop for a few minutes and think about how much money you have earned in your life. Imagine you are nearly 50, as I am, and you have earned an average of USD 100,000 per year for 25 years. Yup that is USD 2.5 million. Or you earned USD 50,000 per year, that is USD 1.25 million – now what do you have to show for it?  Do you have savings? Do you have credit-card debt or other personal loans? The majority of people carry debt and have no or minimal savings!

I think this is very sad… and scary.

Where does your money go?

Unless you start a tracking system for where your money goes you will never know – and most importantly you will never get out of the spiral of debt, or impulse buying, which is burning or frittering away your money.

Every change programme starts with one thing. Know where you are. That means you must take responsibility for assessing what you are doing with your money. Because when you know where the money goes – then you have a wake up call. Yikes – “do I really spend more on Internet connection, mobile phone and TV cable programmes, than electricity, gas and water costs?” Or “Does my grocery bill really cost $60 per day, one third of my monthly income?” 

It really is startling when we add up where our money goes – then we can make a change.

Check Your Bank Account Every Day 

One of my habits is checking my bank accounts every day. That way, I know exactly how much money I have, which affects how I go about my daily life. After I have set money aside for my saving goals, if my balance is low, I know instinctively that I need to pass on the extras. If the balance is high, I might allow myself to splurge a little. 

Being aware of where your money goes will create positive changes in your financial health. A few simple shifts can create the nest egg of savings that you have only dreamed of.

Have you taken stock of where your money goes? Did it shock you and what tips would you share to get into savings mode instead of squandering mode?

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Author
Head of Behavioral Finance
cashy
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