Great Savings 56 – Lead With The Details

 

This is Great Savings 56 - Sweat The DetailsWhy do anything in life halfway? Thomas Paine, one of our founding fathers has often been quoted as saying, “Lead, follow, or get out of the way.” When it comes to finances, it’s worth thinking about this approach to maximize savings, cut expenses, and invest for the long-term.

 

Tommy Paine - One of our founding fore-feathers.

Like most famous sayings, this quote was probably invented by a duck. Think about it: If you’re part of large flock it makes total sense.

Though it turns out this quote may be incorrectly attributed to Mr. Paine; the statement points out that in everything we have choice. Whether it’s to build a nation or save a little money, it’s our responsibility to know our role. If you are single you really don’t have a choice, you have to lead when it comes to your finances for no one else will be around to do it. If you are married or have a family, your partner may be in charge of the family finances. Yet in either case, it’s a good idea do delve into the details yourself and lead where it makes sense, follow where it doesn’t, and get out of the way if you’re uncertain how to proceed.

 

Beyond knowing your role in your household’s financial pecking order, the best long-term strategy for success is to sweat the details. What do we mean? You can’t save for the long-term if you don’t know how much you make and how much you spend. That’s why it’s critical to get a handle on all the money that passes through your hands. These days, that can get complicated.

 

 

gst56-jb-accountant

JB works long into the night trying to get a grip on his finances.

It wasn’t that long ago that everyone had a checking account and most purchases were made either with cash or by check so they went through your bank. Now, people pay with cash, check, debit or credit cards, wire transfer, or even electronic currencies like Bitcoin. In addition, most every service we buy comes with a monthly fee that may show up on your bank statement, your credit card statement or perhaps by mail. And to further complicate the issue we pay some or even most of bills automatically, some by electronic bill paying services through our banks or companies like PayPal, and some by debit or credit card, or good old cash.

 

A pile of receipts.

Do you know how you spend your money? Gather up those receipts and find out.

If you are paying your bills multiple ways, have multiple credit cards or bank accounts, share expenses with a partner, roommate or spouse, then you already know collecting all the financial data for the transactions you make is a process that get pretty intense. Still, without some way to track this information and track it accurately, you’re bound to set yourself up for failure.

 

A money puzzle.

Can you piece together your financial puzzle?

Sweating the details implies taking the lead when it comes to your money. You wouldn’t build a house without a set of plans, right? So how can you expect to build savings or cut expenses unless and until you’ve done all your homework?

 

We shouldn’t leave off without saying that if the goal is to be super thorough, leading with the details goes further than scratching out a simple plan. It also requires getting a grip on the minutia so that you can set up a Plan B. If you aren’t familiar with the term, “Plan B” refers to the plan you have in place should your first plan fail. After all, life rarely works the way we think it will. So why not consider what would happen if, say, your spouse lost their job, you got a raise, you became disabled, you had to retire 5 years sooner, etc.?

 

Calculate where you stand.

Don’t wait to get started. Take the first steps today. You’ll never be sorry for mastering your finances.

Action Item: Commit to taking a lead role when it comes to your personal finances. If you don’t have one yet, get a financial app for your smart phone or software for your computer (think Quicken or Mint), or open a set of books by hand. Now, track all your expenses and all your income. Get a handle on how much you spend for major items like food, housing, utilities, clothing, entertainment, and so on. Decide where you can make choices to save on spending. Set up goals for saving. Set up a retirement account or college fund. When you think you’ve got a good handle on your money, you’ll be amazed at the new found sense of confidence you’ll enjoy. Plus, there will be far less to worry about should something go wrong, because you’ll already have back up plans ready and waiting. Don’t despair if this process seems hard. It can get complicated and we’re not all cut out to be our own personal financial gurus. By all means, if you need help seek out a money savvy friend, personal coach, or an accountant. Remember: Lead if you can, follow if it makes sense, or get out of the way if you must.
 

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