Getting a Real Savings Started: (Day 2: Assess)
We’re on a journey to finally get a real savings started. So far, we looked at a fundamental principal of wealth- Pay Yourself First, what that means, and what that looks like. Next step, assess where you are. You can’t create a real savings, except you assess where you are financially or where you are starting from.
First write down all your income and expenses. You can use a simple Excel Spreadsheet. They are easy to find or you can email me and I can send you one. Otherwise, go old school and just write it down in a little notebook. Capture the income coming into your household. If it’s more than just you, then it’s better to do this together. You multiply your results exponentially when you work together because you’re moving in the same direction with double the energy and effort. But it’s not impossible to make great progress on your own. Just realize it’s going to take extra effort to build momentum. But many people have done it and you can too.
Write down, your income and your expenses for the last month. If you use debit like many people do, it should be fairly easy. Just pull your account statement(s) and write down each transaction that came into and out of your account(s). If you spent cash, tracking past spending is going to be a challenge. If you aren’t able to account for ALL your spending, then start tracking today. Over the course of the month, write down all your income and expenses. Track every dollar. It’s critical to see your spending habits and where your money is being spent.
After you have captured a month of income and expenses, did you have a net income or deficit at the end? Do you have money left over? Now, on the surface it would seem strange to even have to ask that question because if you have income of $2000, you couldn’t have spent of $2500- or could you? It depends, did you use credit? When you were tracking your income and expenses, did you include all your credit card accounts? If you forgot those, go back and include those transactions as well.
This assignment has a two-fold purpose. First, it will help you assess whether you are operating in the black (where you have money left over) or in the red (because you overspent). If you are operating in the black, it will be easier to start saving and determining how much to save. If you are operating in the red, you’ll have to address a couple things first, but you can still totally do this! We’ll talk about more about this in the next article.
Second, you will immediately start to benefit from seeing your spending habits. You’ll start to examine your spending every time you have to write down a transaction. Visually seeing minus this, minus this, minus this, minus this (you get the picture) is a powerful teacher. Ever heard the saying, Ignorance is bliss? Well, it is. As long as you don’t really see what’s happening the pain is dulled. But, when you actually see it, it’s like blunt force trauma sometimes. It depends. Either way, you benefit from the exercise. You’ll start to see where you’re throwing away money and how much. It’s empowering to know. At least you don’t have to wonder or assume, you’ll know where are when where you have to start.
Be diligent in tracking and assessing. Let’s keep walking through this together for the rest of this week, as you learn to get a real savings in place.
This week’s scripture, says, The plans of the diligent lead surely to abundance, but everyone who is hasty comes to poverty (Proverbs 21:5).