| > | | | | surprised at the length of this list and all the places |
| | | | you spend your money. |
| More and more individuals are realizing that treating | | | | 2) Track monthly your actually spending and income |
| yourself like a business, as opposed to just an | | | | against the budget you established in step 1. This will |
| individual taxpayer, reaps benefits like 1) reductions in | | | | help you see the 'peaks and valleys' of spending or |
| personal income taxes, 2) control of personal and | | | | seasonality aspect of your expenses. Over time, you |
| household spending and 3) stress reduction overall for | | | | will come to know these expense 'peaks and valleys' |
| a happier, healthier lifestyle. So why are the principles | | | | and this will help you maintain a positive cash flow. |
| of good business applicable to our own personal lives? | | | | Bottom line: have money in the bank to pay all your |
| A look at how small business best practices can be | | | | expenses and still have some left over (retained |
| applied to you and your household and easily create | | | | earnings). Your single biggest challenge in running any |
| your personal company, 'Me Incorporated' or 'I Inc'. | | | | household (or business) is always having enough |
| Why would you not consider yourself a business of | | | | money in the bank to pay the bills; especially, the |
| ONE person? Or your family as a business of 3 or | | | | unexpected ones. Having a buffer of savings will help |
| more people? Well that is exactly what you are - "Me | | | | with these 'peaks' in expenses. |
| Incorporated", "I Inc", "We Incorporated". You truly | | | | 3) Track all your bank account activity. Track and |
| must consider yourself a small family business. Like | | | | enter in your Bank or Check Register every deposit, |
| any business you have ongoing expenses (mortgage, | | | | every electronic (ATM, web, PayPal, debit machine) |
| rent, utilities, groceries), revenue (salary and other | | | | transaction and every analog (check, money order) |
| income) and major capital expenditures (house, | | | | withdrawal. And reconcile your bank statement every |
| vehicle, vacations, renovations). | | | | month. Know exactly how much money you have |
| Like any good 'household business', you need to do | | | | available in your bank account(s). |
| some planning. Set out a budget for the year, track | | | | 4) Especially track your spending through credit cards |
| your expenditures and retained earnings (savings). | | | | and lines of credit. These are potentially the 'run |
| Yes, all of this looks, feels and is exactly like a well | | | | away' expenses. Remember only once a month do |
| run business. On My Gosh! Don't rush out and buy an | | | | you see the visible record of your credit card |
| accounting package to run your household. And no | | | | spending. Compound that with the fact that most |
| need to take a crash course on accounting or | | | | people have more than one credit card. This can |
| bookkeeping. You can accomplish all your financial | | | | easily result in multiple 'spending surprises' each month. |
| tracking and planning requirements with some paper | | | | Be diligent in tracking your use of credit card |
| or by using a simple template with your favorite | | | | transactions. Breakdown the credit card expenses |
| spreadsheet package - Microsoft Excel or even with | | | | into their respective budget items - gas, groceries, |
| Open Office. | | | | clothing, entertainment, etc. This will help you |
| Just like a well run business, your household budget | | | | separate normal household expenditures from other |
| and tracking your spending is best served using a | | | | shopping incidentals. You will come to see your |
| visible record of events; namely, financial records, | | | | spending patterns and can now make adjustments. |
| bank or check register. It is just like tracking your | | | | Just like your bank account, reconcile your credit card |
| road trip progress using a map. If you know where | | | | statement every month. |
| you are now, then you will have some idea when | | | | All this personal bookkeeping every month can be |
| you will arrive at your destination. In life, money or | | | | done with pen and paper or set up a personal |
| finances allows you to get to your personal | | | | finance and budgeting template using your favorite |
| destinations or dreams. A visible financial roadmap of | | | | spreadsheet software. Using an electronic |
| your 'Me Incorporated' finances, mapping your | | | | spreadsheet allows for all of the mundane calculations |
| progress, seems logical. | | | | to be processed automatically, reducing monthly |
| Running your 'Household Business', like corporate | | | | reconciliations to a simple 5-10 minute endeavour. |
| business, requires a few processes to keep track of | | | | Whether you choose an analog or digital approach to |
| your finances: | | | | your personal finance bookkeeping, these visible |
| 1) Establish a yearly and monthly household budget. | | | | records are the most effective way to plan and |
| Consider all your expenses - weekly, monthly, | | | | control your personal finances and reduce one of the |
| quarterly and yearly outlays of money. You will be | | | | major stress points in your life - Your Financial Health. |