I know it sounds like an annoying things to do but it really doesn’t take as much time as you think. I discovered this idea when I was listening to a podcast from an entrepreneur who was trying to build his buisness and keep track of his cash flow. He said he needed to watch his accounts everyday to keep track of where his money was actually going and if it was going to build his business.
I think personal finance works the same way. Where is your money going? The first step in that is developing a useable budget. I go into a lot of detail on selecting an on-line budgeting program in my new ebook “How to choose the Online Budgeting tool that will save you Money,” to be released next Sunday.
In addition, to finding the best way to budget, it is important to maintain that budget. For me I have started to glance at my accounts on a daily basis. Sometimes it’s just to see my balance. If time permits I will review my debits and credits to see that what is in my wallet and what is in my head actually match up.
The funny part is I have found that the amount I think I should have in my accounts is often not the amount that is actually in there. Often times I will over estimate my balance and underestimate what I have spent.
On two occasions in since doing this daily review I have found unfamiliar purchases. They turned out to be auto-billings for services I no longer use but have continued to pay for monthly. Wow! How did I let that happen?
One of these auto-bills didn’t even have the name of the vendor, only the purchase origninator (Paypal). So I was unable to contact the vendor and cancel the service. Luckly, Paypal was very helpful and allowed me to dispute the service, credited the most recent charge and prevented any other billings from this service.
What I also noticed by checking my accounts daily is that I have been doing a miserable job of saving. One of my goals this year was to save for some large purchases of a car and kitchen flooring. That is not going to happen if I am not more aggressive with my rate of saving. So I have started to transfer more money to my savings account.
Last year, I found that I was frequently surprised by my account balance and had over drafted more then I care to admit. This was because I kept spending without accounting for outstanding checks and amounts set to auto-bill. By looking at my accounts daily I have a much better idea of what I have left and can be sure that there are sufficient funds to cover any checks or bills coming up.
Wow..that’s ground breaking… looking at your account….how did I come up with that one…I know it seems like a stupidly, simple idea. I mean really just look at your account? But I will admit that a lot of the reason I never looked at these account was I was in denial.
If I never admitted that my checking was running low I could continue to spend. If I really never looked at the account, I wouldn’t have to come to terms with my spending habits. I could blame my overdrafts on bad timing of bills, not my own actions. I could just keep spending without having to question what I was buying and if it was something I really needed. I abdicated my own personal responsibility for finances and lived in a fantasy world.
The biggest lesson in this for me is that by looking at my account daily, I am reinforcing that I am in control of my finances. On a daily basis I remind myself that how much I spend, how much I make, my fiscal freedom and where I go financially depends on the choices I make.