At this point, the hard work is done. You’ve created your own personal money management system:
Now you simply need to set up regular checkpoints to monitor your system. I suggest reviewing your finances twice monthly.
Managing your money is all about getting the big things right. Therefore, it is important to have a quick method to look at your finances at a high level. For that reason, I created a nifty little spreadsheet that gives me a bird’s eye view of my three big buckets: giving, saving, and spending. I have dubbed it The Ultimate Financial Tracker.
For me, Mint.com combined with my Ultimate Financial Tracker are the dynamic duo of financial management tools.
The best way to save is to not have to think about it. By the time my paycheck hits my bank account, I’ve already put aside a portion that’s earmarked for giving and a separate portion that’s earmarked for saving. Once I get my check, there’s nothing left to do but spend that shiz.
Here’s how I do it…
By deciding up front how much of your income you want to contribute toward giving and saving, the amount you have left to spend is pretty straightforward.
spending = income – (giving + saving)
The best way to save money is to figure out how to spend it. If I don’t have a good idea of how I really want to use my money, I’ll often spend it frivolously. If I know what I want, then I’ll spend my cash with a purpose- even if that means saving for a time.
The number one rule of money management is spend less than you earn. It’s hard to do that if you don’t know how much you spend. Step one, then, is to figure out how much you spend (and on what).
It can be a scary prospect to open up your financial kimono. Fortunately, it’s a fairly simple process. And after you get over the shock of realizing that you spent $500 last month on wasabi flavored ice cream, you’ll have the information state to figure out how you’d like to spend (or not spend) that $500 going forward.
As COO at a startup company, I manage literally millions of dollars. Each week I spend hours focusing on corporate finance. And yet, until this year, I’ve had no good system to actively manage my own personal finances.
For me, as with most, I knew I should be managing my money, but I had no idea how to manage my money. I’ve spent the last year educating myself on personal finance and I’ve come up with a lightweight system that works well for me.
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