Simple Personal Finance Checklist - Consider Yourself as a Business

By: Carl Chesal

Why would you not consider yourself abusiness of ONE person? Or your family as a business of 3 or morepeople? Well that is exactly what you are - "Me Incorporated","I Inc", "We Incorporated". You truly mustconsider yourself a small family business. Like any business you haveongoing expenses (mortgage, rent, utilities, groceries), revenue(salary and other income) and major capital expenditures (house,vehicle, vacations, renovations).

Like any good 'household business', youneed to do some planning. Set out a budget for the year, track yourexpenditures and retained earnings (savings). Yes, all of this looks,feels and is exactly like a well run business. On My Gosh! Don't rushout and buy an accounting package to run your household. And no needto take a crash course on accounting or bookkeeping. You canaccomplish all your financial tracking and planning requirements withsome paper or by using a simple template with your favoritespreadsheet package - Microsoft Excel or even with Open Office.

Just like a well run business, yourhousehold budget and tracking your spending is best served using avisible record of events; namely, financial records, bank or checkregister. It is just like tracking your road trip progress using amap. If you know where you are now, then you will have some idea whenyou will arrive at your destination. In life, money or financesallows you to get to your personal destinations or dreams. A visiblefinancial roadmap of your 'Me Incorporated' finances, mapping yourprogress, seems logical.

Running your 'Household Business', likecorporate business, requires a few processes to keep track of yourfinances:

1) Establish a yearly andmonthly household budget. Consider all your expenses -weekly, monthly, quarterly and yearly outlays of money. You will besurprised at the length of this list and all the places you spendyour money.

2) Track monthly your actuallyspending and income against the budget you established in step 1.This will help you see the 'peaks and valleys' of spending orseasonality aspect of your expenses. Over time, you will come to knowthese expense 'peaks and valleys' and this will help you maintain apositive cash flow. Bottom line: have money in the bank topay all your expenses and still have some left over (retainedearnings). Your single biggest challenge in running anyhousehold (or business) is always having enough money in the bank topay the bills; especially, the unexpected ones. Having a buffer ofsavings will help with these 'peaks' in expenses.

3) Track all your bank accountactivity. Track and enter in your Bank or?CheckRegister every deposit, every electronic (ATM, web, PayPal,debit machine) transaction and every analog (check, money order)withdrawal. And reconcile your bank statement everymonth. Know exactly how much money you have available inyour bank account(s).

4) Especially track yourspending through credit cards and lines of credit. Theseare potentially the 'run away' expenses. Remember only once a monthdo you see the visible record of your credit card spending. Compoundthat with the fact that most people have more than one credit card.This can easily result in multiple 'spending surprises' each month.Be diligent in tracking your use of credit card transactions.Breakdown the credit card expenses into their respective budget items- gas, groceries, clothing, entertainment, etc. This will help youseparate normal household expenditures from other shoppingincidentals. You will come to see your spending patterns and can nowmake adjustments. Just like your bank account, reconcileyour credit card statement every month.

All this personal bookkeeping everymonth can be done with pen and paper or set up a?personalfinance and budgeting template using your favoritespreadsheet software. Using an electronic spreadsheet allows for allof the mundane calculations to be processed automatically, reducingmonthly reconciliations to a simple 5-10 minute endeavour. Whetheryou choose an analog or digital approach to your personal financebookkeepingScience Articles, these visible records are the most effective way to planand control your personal finances and reduce one of the major stresspoints in your life - Your Financial Health.

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