We get an enormous amount of valuable information from the data created by personal bookkeeping. Here are some of the basics…
1) You actually know if you spent more money than you made in a given time period. This is what determines if you get to invest money for your future, or if your debt hole just got bigger. 2) You can identify the areas of spending where you have the biggest overspending issues. 3) You can identify areas of spending that you thought were much less than they actually are.
A Silly Bit of Bookkeeping Fiction to Illustrate My Point Obviously, you’d first inquire, “Well, what does this business do?” and “how much money do you charge for the product?” Easy for hipster dude to answer.
I really do credit much of my success to consistent money tracking. There is actually a not-so-widely known term for this process…it's called “personal bookkeeping.”
The truth is that, initially, most of my knowledge about business finances resulted from me hiring myself to run the business of me. Congrats to me. I gave myself my first job of “running a business” fresh out of college (and up to my eyeballs in debt)! I started tracking all my income and expenses, and figuring out if the business of me was a “winner” or “loser.” As it turned out, my business was seriously underperforming. I really needed to improve the ol' cash flow.
I bet right about now you're thinking, “Cool Joe, but the title of your post indicated you would provide a solution for the problem of me not liking to manage my finances. Is there some way around this crap?”
When it comes to personal bookkeeping the reality is, if you don't track your income and expenses, you WILL OVER-SPEND on stupid crap. And therefore you will have less money to invest and help you achieve financial freedom. Or even worse, you'll spend more than you make, and saddle yourself with useless crap and possible debt!
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