Mastering Money

Challenges make you discover things about yourself that you never really knew.

--Cicely Tyson

One of​ the​ cardinal rules about Mastering Money is​ that our income MUST be greater than our outgo. in​ simple words,​ spend less than you earn.

The way to​ initiate is​ to​ keep track of​ every cent that comes into or​ goes out of​ our life. There are many ways to​ do this,​ and so there is​ a​ method that will suit almost everyone:

Personally,​ I keep receipts of​ every purchase I make in​ my wallet. at​ the​ end of​ the​ day,​ when I come home,​ I transfer the​ receipts into a​ folder I have created for expenses for that month. For example,​ ‘Expenses Nov 2006’. For those items that I don't get a​ receipt for,​ I write down the​ expense on​ a​ small slip of​ paper and put that in​ my wallet.

At the​ end of​ the​ month,​ I add up all expenses in​ the​ folder for that month,​ under the​ appropriate categories. Now I know exactly where my money is​ going. if​ I happen to​ spend too much money in​ one area,​ I will know immediately and can make necessary changes in​ money allocations for present and future months.

I have been doing this for years and it​ works incredibly well. It's really useful to​ get an​ idea of​ what my total monthly expenses usually look like,​ as​ well.

You can use any category structure that you like for tracking expenses. I like to​ keep things as​ simple as​ possible. I use the​ 10 category structure that I got from Robert G. Allen:

1. Giving (Charity,​ Donations,​ etc.)
2. Self (Savings)
3. Taxes (Income tax,​ property tax,​ etc.)
4. House (Mortgage,​ rent,​ etc.)
5. Household (Household expenses like groceries,​ etc.)
6. Auto (Auto expenses like gasoline,​ etc.)
7. Fun & Entertainment (Dining out,​ buying toys,​ etc.)
8. Insurance (Insurance premuim expenses)
9. Miscellaneous
10. Business (Business expenses if​ you own a​ business)

Once you know how much is​ going out on​ a​ monthly basis,​ you will have the​ necessary data to​ know how much you need to​ bring in​ on​ a​ monthly basis. It’s common sense and a​ very simple mantra.

If you don’t follow this simple mantra,​ you will not be able to​ see exactly where your money is​ going,​ and where you can curb expenses if​ you need to.

Warren Buffet has 2 rules about money:

1. Never loose it
2. Never forget rule number 1

There are 2 things that I will continue to​ do as​ long as​ I can live. One is​ to​ keep a​ journal and the​ other is​ to​ always,​ always,​ always pay myself first.

How about you,​ Wanna Master Money?

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