Monthly Financial Disciplines
In “Ballin’ with Spauldin’”, Episodes 1 and (Episode) 2, I discussed basics of Financial Statements and Cashflow, two things never discussed in our educational system. If parents didn’t teach it, odds are you didn’t learn it.
Things you should be doing:
1) Reconciling bank accounts (monthly)
2) Accounting for every dollar made and spent (monthly)
3) Generating personal income statements and balance sheets (quarterly/semiannually)
Many are uneducated on how to do these. Others feel broke, so they assume they are and figure they mine as well not even worry about it. And although checks are becoming obsolete, one should still know how to write one. You should be able to balance your bank accounts as well. After all, if you aren’t looking after your money, who is?
Putting an emphasis on financial organization can be a stress relief for two reasons:
1) You know where you stand
2) Because of #1, you can change where you’re currently at
Ignorance or apathy, it doesn’t matter. You are accountable for your money. If you do not know where you stand, it’s unlikely your finances will ever get better. Your bank statements, income statements and balance sheets are great snapshots of where you are right now. With minor discipline tweaking, you will realize huge financial gain.
For example, too many people are excited to go out and immediately buy a new car. Did you know that monthly payments of $300 per month over the five years it will take to pay off that loan could be worth well over $200,000 in 30 years? Invest that money instead!
After successfully going over your finances monthly and implanting systems to gain wealth, it’s amazing how much can actually be left over each month.