Know Thy Finances

The first step to financial success lies in knowing your financial situation at any given time. There is an anecdote attributed to John D. Rockefeller--that as a child he was given a monthly allowance from his parents, but upon stipulation that he had to save 10% of it, give away 10% to charity, and account for the rest of it. While his parents required that he record down to the penny where he spent it--you can be a bit more lenient on yourself!

Track your spending for 1-2 full months

Use a program like Quicken to keep track of all your personal finances. I recommend the latest version of Quicken or a similar financial program if you already own one. You should start out by entering in your present-day personal checking account, savings, investments, and cash situation.

To complete this step, you will also need a cheap plastic filing container or something similar. You can purchase these for about $15 at Office Depot, etc. As you make payments, keep track of all the receipts you receive, the checks you write, and any other monetary transactions you make. Like I mentioned earlier, you don't need to be exact when it comes to cash--just try to be, as much as you can tolerate.

At some later time, at your leisure, enter all this transaction data into Quicken. As you do so, put the purchasing receipts into the file folder under the appropriate Category. Make separate labels for each of the file folders-- I suggest some of the following:

  • Personal

  • Household

  • Charitable

  • Books & Education

  • Dining Out

  • Business Expenses

  • Taxes

  • Misc.

    You can also add your own categories or remove some as appropriate. At this point, you may be wondering why you have to do all this. For the moment, just trust me that it will be beneficial to you (I will explain it later on). Also, it takes a grand total of about 10-15 minutes per week to do what I just described. The next section, Budgeting, will take a little longer. But budgeting also requires that you need to at least perform the first step mentioned above, that is, keeping track of what you currently spend.

    Planning your Budget

    I can already hear what you are going to say--oh no, not a budget! I don't like them either, because they tend to reign in my emotional spending or "I gotta have it" mentality. The truth is, you are the master of your financial destiny (not to sound corny, but its true for the most part). If you want to buy that fancy knickknack with the wireless PDA attachment downloader, then by all means, get it. But if it doesn't serve your needs in the long run, then you will have wasted $X dollars to serve your fleeting emotional desires. Besides, you will notice after tracking your budget for several months where the real money is flowing. You might buy a fancy computer toy only occasionally, at $200+ dollars, but eating out at lunch everyday + dinner with the girlfriend at fancy restaurants all the time is leaving you broke. How about going to bars? I like to drink, but a beer at a bar or nightclub can range from $4-$10. It's probably even more if you live in areas like San Francisco or New York.

    Anyway, the point of planning your budget is just to get a better grasp on directing the flow of your money. I'm not saying that you should totally change your lifestyle or even change it at all--but if you are complaining about not having enough then there are certain things you should do, mainly spend less. It will be described later the benefits of saving & investing your money (which you probably already know anecdotally, but perhaps do not have extensive experience personally).

    Good Luck!

    About The Author

    Shanti Braford

    Editor/Publisher

    The Long-Term Value Letter

    http://www.ltvinvest.com/

    In The News:

    • pen paper and inkwell


    cat break through


    Ways to Save Energy and Slash Electricity Bills

    1. Lighting & Light Bulbs Install low energy light... Read More

    College Expenses: Seven Ways to Save on an Education

    Many people graduate from college owing thousands of dollars in... Read More

    Learning the Basics of Handling Money

    With prices increasing all the time, saving money can be... Read More

    Understanding Your Finances Can Give You Power And Choice

    What is finance and what do you need to know?... Read More

    The Origins of Check Writing

    People haven't always written checks to buy goods and services.... Read More

    Estate Planning Basics

    You have probably accomplished a great deal with your life.... Read More

    How To Place an Online Order for Checks ? It is Easy as 1-2-3

    If You Have an Existing Account and 5 Minutes, You... Read More

    The Good and the Bad of Money Management

    Good money management needn't be difficult. In fact, there a... Read More

    Vacations Made Easy: Buying a Florida Investment Property

    Vacations Made Easy: Buying a Florida Investment PropertyA relaxing beach... Read More

    Check Fraud and Verification

    Before buying personal or business checks you should inform yourself... Read More

    What?s New in Checking ? From Designs to Photos

    Just about everyone has a checking account. Checks present easy... Read More

    How To Free-Up 10% to 15% of Your Income

    Would you be interested in freeing up 10% to 15%... Read More

    Creating A Household Budget

    Creating a budget can be a very difficult task. Although... Read More

    Budgeting your Savings - Did You Let Your Piggy Bank Get Away?

    I think most of us have at some point in... Read More

    Live Green; Save Green!

    Have you seen the recent article on a new "green"... Read More

    Saving Dimes Can Go a Long Way

    On the other hand, there are those people who are... Read More

    UK Graduates Looking Short-Term At Their Long-Term Financial Responsibilities

    With almost two thirds of university entrants from England and... Read More

    Help With My Annuity

    The cries are heard from the distance, "I need help... Read More

    10 Quick And Cheap Ways To Cut Your Heating Bill

    When you received an energy (heating) bill last winter, were... Read More

    Save On Food - Ten Tips

    To save on food, be an opportunist. Buy what you... Read More

    What is a Traditional IRA?

    With a traditional Investment Retirement Account (IRA) you pay taxes... Read More

    Improve Your Professional Image Using Address Labels

    One of the simplest ways to improve your professional image... Read More

    Family Money Management: The Importance of Agreement

    Are you having problems with debt? Are you afraid to... Read More

    Financial Fitness - Are You Exercising the Right Muscles to become Financially Fit?

    Are your financial muscles well toned and healthy or flabby... Read More

    Resources to Help You Learn About and Protect Yourself from Identity Theft

    There is a new bill that is being passes, it... Read More

    Simple Ways to Save Money

    Things are so expensive these days. We seem to be... Read More

    How to Obtain a Non ChexSystems Bank Account Without Being Scammed

    Predatory lending exists in the mortgage industry. It's typically when... Read More

    Money Matters - Really!

    One of the biggest challenges facing black RELATIONSHIPS today are... Read More

    How to Balance Your Checkbook ? Get a Calculator and Pencil and You are Ready To Go!

    Despite how easy it is to balance a checkbook, very... Read More

    How to Attain Your Dreams on a Single Income

    If you recently became a single parent and see your... Read More

    Healthy Eating On A Budget

    It is possible to eat a healthy, balanced diet without... Read More

    Single Mother and Learning how to Save

    Saving may seem easier if you were saving for a... Read More

    Identity Theft is a Major Problem: Whose Responsibility is It to Protect the Consumer?

    We have heard a lot about consumers' personal information getting... Read More