Take the time to find out where your money is going on a day-to-day basis.
If you’re not exactly drowning but have the distinct feeling that you’re treading water while others swim merrily by, then here is where you’ll find the means to get moving.
The first step is to perform a little piece of self-analysis. Taking some time to record what you do with the money that passes through your hands on a day-to-day basis will pay off in valuable information about the state of your financial affairs.
You’ll have exact figures for some expenses. Go over your account receivables, paychecks, bills and credit card statements. Hang on to cash-register receipts from suppliers, inventories, payrolls. The more actual expenditures you can pinpoint, the more you’ll know about your spending habits when you’re through.
No matter how this exercise comes out, you’re going to be confronted with the evidence of your spending, and forced to make some judgments about it. You’ll find yourself in one of three situations:
Income and expenditures are roughly in balance.
Making it from one year to the next without getting into a hole may be something of a feat these days, but before you start patting yourself on the back, check your totals again. How much did you put into earnings compared with what you spent on team recreation, office rent or supplies? Out-of-whack entries in those or other categories of discretionary spending could mean trouble’s brewing. There’s more to good money management than balancing the Book. You have to balance your priorities, too.
Made more than you spent. This isn’t necessarily a good sign, either. Because your cash-flow statement includes savings and investments, you shouldn’t have any money left over. What may at first look like a surplus is probably just a failure to remember some spending. Go over the numbers again.
Spent more than you made. This is the clearest sign of trouble ahead. You’ve either been dipping into savings, borrowing money or buying on credit. You can get away with it for a while, and there are times when it’s smart to borrow or when you have no choice. But as a regular practice, it’s bad money management that will cost you in the long run.
Go over your budget carefully, looking for places where your money might be dribbling away.
After graduating year 12, Dan began his banking and finance career at Westpac Banking Corporation in Brisbane in 1988. He worked for the bank for seven years, excelling in his career and working his way up to management.