Financial Tip of the Week

Financial Tip #3
Know where your money is going, or it will control you!
That means tracking what you spend and where you spend it !!!

As I preached to my children, one of the most powerful tools we have in life is the ability to choose. We all make choices. Some of those choices are good and some are poor (my kids can tell you about our talks about poor choices). Regardless of the choices made, however, there are always consequences to our choices. One of the most important choices we all make is how we spend our money.

I have been using Quicken for the past 14 years. I track every major and minor expense we have. I can tell you how much I have spent on McDonalds each year (way too much). I can tell you how much gasoline I have purchased each year... and can provide evidence that in spite of the high gas prices last year, the real impact was not that great! I can tell you exactly how old our hot tub is and what it cost... and what the yearly cost is over the life of the hot tub, and can tell you that a replacement is about the same cost as the original in today's dollars, even though it appears to cost much more.

The point is, that I do not believe you can make appropriate choices in life without data, and a way to turn data into information. With information and data, you can make decisions on how spend less or save more, and the choices become easy... and I would dare say much better.

When we first got married 34 years ago, my brother-in-law Emerson gave me a Capital Family Financial Planner. This was way before computers and Excel spreadsheets. It was a manual spreadsheet with various categories to track your expenses on a monthly basis. We used them for several years. You added up the rows and the columns each month and then totaled them for the year. (I recently found a stack of them in the basement...what a blast from the past) But after several years, we stopped... too much work. There were gaps in the months... It just seemed like busy work.

Problem is, as we look back, the many years that we did not track our expenses were the very years that we made some poor choices... or ended up with a lack of choice in our spending because we had no data.

It wasn't until we woke up one day 15 years ago and realized that we were spending every dime we had and had nothing saved, and our kids were rapidly approaching college that we realized that money was controlling our lives and our choices.

I started using Quicken.... and in time became obsessed with it. It gave us control and better choices. It literally changed our world. We finally had control over what we spent.

Regardless of the tool you use, track what you spend. Know where it is going. Then
armed with data and information, you will have the knowledge needed to make appropriate choices.

Your money will never control you or your choices, if you control your money.