You might be wondering why I haven’t mentioned ‘goals’ yet? Well, it is very difficult to formulate a realizable goal when you don’t know the ‘story of your own financial spending’.
You must specify where your money is coming from (if you have multiple income streams), where it is going to, and how to make sure that the way you manage your money falls in line with the values that matter most to you.
This part involves jotting down your monthly income and expenses. This is the part we don’t like, but it pays off in the end and the fact that you’re reading this article means you’re ready to take on this beast.
It always comes as a bit of a shock when we see in writing before us just how disorganized we are when it comes to money management.
Analyzing how we spend our money allows us to see that perhaps we are spending too much money on ‘stuff’ and far too little on investments. Simply adding up the total that we spend within various categories such as food, clothing and techno-gadgets will give us a good place to start our financial ‘clean-up’. It’s a good idea to use 3 months worth of bank statements to analyze your average income and expenditures, particularly if you don’t follow a budget and have wild variation in either your income or expenses.