Transparent Financials
I have to admit one thing: during adolescence, I had largely learnt how to spend money, not how to save it. My parents had acquired a good living standard, and there was no need for them to spend a lot of effort on saving money, let alone keeping track of their income and expenses.
But as times change, making a career in the new millennium must be quite different from pursuing a career in the 70′s and 80′. The introduction of the Euro didn’t make thins easier either. For some reason, whereas I had no problems with my finances as a student, I had the greatest difficulties during my first job. Mostly, I was confronted with costs and expenses, which I did not have before, and at the end of my money I still had a bit of month left. And the worst thing was, that I didn’t really know where my money was going.
I started using Microsoft Money about 2 years ago, and things changed dramatically. I recognized how important it is to make my financials transparent, so that I know exactly what my income was, how much money I spent, but most importantly how my finances are developing over time.
Although it is a bit of work, I take some minutes to sit down behind my laptop each day, and enter all the transactions for that day. I use pre-formatted reports, which allow me exactly to tract my balance for the month, for the quarter, and for the entire year. That way, I can see at any given time how I am doing, and whether my finances are within limits. Furthermore, I can track my net worth, and see it growing each month. This is the real prove that my finances are improving, and that I am growing.
In summary, keeping track of my finances has helped me with the following:
- Knowing what my expenses are exactly, and having the possibility to reduce them if necessary.
- Knowing how my wealth is allocated (cash, stocks, stock options, etc.).
- Knowing whether or not I am within my budget for any given period.
- Knowing how my wealth is growing over time.
- Knowing the impact of a change of income or expenses by built-in forecasting tools.
