The Benefits of Organizing: Financials
Imagine you come upon a great opportunity to invest some money that would bring back great returns, and lead you one step closer to building a life of passive income.
Now imagine you are about to enter into negotiations to get the ball rolling, sign all the paperwork, and finalize the deal.
The process will require that you know where you are, financially.
Can you afford the investment? How will you finance it?
In order to have the answers to those questions, it may be helpful to know:
What are the sources of your income?
What are your monthly expenses?
In our monthly meetings at Shifting Paradigms, we review several potential investments related to our goals of passive income and financial freedom. At this point, some are way too costly to invest significant time and energy towards. And some are within our reach, but require lots of research and re-organization on our part in order to make an investment opportunity a reality.
Recently, I decided that I better get my financial butt in gear. I needed to know exactly where I stood, financially, in order to get a better picture of what I needed to do to plan accordingly for investments.
Coached To Earn What I Deserve
A few years ago, I hired a life coach. One of the exercises that he encouraged me to do was to get better control of my money. This was at a time when I was neck high in bad debt (i.e., mostly credit card debt incurred as a college student; good debt, by the way, would be like the mortgage on an investment property). He suggested a book called Earn What You Deserve by Jerrold Mundis. It's an easy read, full of great exercises that are practical, yet powerful in helping you see your potential as an earner. Plus, it's really at a cheap price! I continue to apply the author's lessons today, such as my favorite one that goes, "NEVER TURN DOWN MONEY."
One of the exercises in the book explores the use and benefits of "spending plans." They are akin to monthly budgets, but without the connotations that "budgets" have. For example, if I were to budget for next month's groceries at $150, and actually spent $200, I might feel disappointed that I went over-budget and feel that I have no control over my expenses. But if I "plan" to spend $150 on groceries and actually wind up paying $200, I won't feel like a failure, but rather use that information not only to create next month's "spending plan," but to improve my overall sense of who I am in regards to what kind of "spender" I am. That ultimately adds to my personal growth.
And I believe it did.
In actual use, the "spending plans" (over 6 months) helped me go from:
EXPENSES > INCOME
to
EXPENSES = INCOME (roughly equal for one month)
to
INCOME > EXPENSES
One thing I was particularly proud of was that I was able to curtail my monthly grocery expenses to under $100, and I didn't starve. I was still able to eat at least three meals a day, and eat the food I wanted. I just didn't spend money on groceries that wound up rotting in my fridge, or becoming upscale condos for the ants and cockroaches in my cupboard!
I stopped using the spending plans a couple of years ago, but have recently renewed my interest in them.
Finding My Money
Over the past couple of years, since stopping the use of the spending plans, I really had no idea of where my money was going. Sure, I knew when I went to Radio Shack to buy audio equipment, or when I went to Home Depot and bought new sink fixtures. But I really couldn't see the amount of what I was really spending until I put it on paper (or actually on my computer screen).
Since starting back up with keeping a log, I have been dumbfounded at how much money actually leaves my pocket/wallet every month!!! The "little things" really add up. They add up so much that I didn't realize that for this month alone, there were several thousands of dollars that left my wallet! Holy sh*t, Batman!!!
Ok, enough of my griping. But what this information about my spending does for me is help me to realize where my money focus and energies have been for a while. It's not bad that thousands of dollars where flowing out of my left pocket (that's where I usually keep my wallet), it's useful information that will help me re-organize and become a better planner, better manager, and better controller of my wealth.
But I am not only keeping track of my expenses. At the same time, I instituted the use of a monthly income log.
A monthly income log???
Yep. Just like I thought I knew where my money was going without the use of an expense log, I also thought I knew where my income was coming from. Shoot, I mean I'm a nurse with a salary that gets paid every two weeks, so nothing to think too hard about, right?
Once I started thinking about all my income sources, I realized that I had acquired sources of passive income that I didn't consider before. And once I started recording this in an income log, I realized that my monthly income was more than just my work salary. Nothing too significant at this point in time, mind you, but do you know what it feels like to realize that you have more of anything than you originally thought? It's a pretty damn good feeling.
About The Templates, Please Read Before Downloading
I've uploaded the templates (see below, with screenshots) that I currently use to keep track of monthly expenses and income. They're very simple with no extravagant formulas. It's basically made to add up the columns and the rows. As soon as you input data, the cells with formulas (indicated by a green tic mark in the corner of the cell, at least on my computer) will automatically adjust.
You can change the headings and category names to fit your situation. I only have those there as place holders and to give you some ideas of what you may want to keep track of. For example, I added an "Accounts Receivable" category to track what money is owed to me. I then added an "Accounts Paid" to record what money was paid to me by debtors. It's a neat little extra that I added, thanks to my early days as an accounting major in college. But it gives me an even more accurate idea of where my money is.
And no, those numbers and figures are not real. I just made those up for demonstration purposes.
Also, I created these on a Mac, using Excel 2004 for the Mac, version 11.3.3. That's the latest version for my computer. I ran the compatibility report for Windows-based PC's and it stated that some of the formulas may not show up correctly for those users.
Hey, I'm just trying to share the knowledge here for free, so if you download it and it doesn't work, I'm sorry. I also can't guarantee that your virus detection software won't go crazy when you download this, or that the alert in your version of Excel won't tell you that this file contains "macros, beware." As far as I know, I don't have any viruses or anything that will cause harm. I've exchanged files with PC users many times over the years with no problems. But if you're concerned, don't download it. Try getting a Mac. They're a lot cheaper (in the long run) than you think. Otherwise, you may be able to make your own templates using the screenshots as a guide. Or you can search the internet for one that will work for you.
The Benefits of Organizing Finances
With that said, I hope that these will turn out to be as useful for you as they have been for me. Through the application of these templates, I have been able to gain some personal benefits such as:
1. Seeing where I stand. Indeed, self-monitoring forms and logs have an instant effect of providing you with a quick snapshot of where you are in life, or at least in one area of life.
2. Better control. I am in a much better position to take control of my finances because I have a clearer picture of where my money is, where it's coming from, and where it's going. I don't feel like I have no say in my finances. I also feel like my expenses don't get out of hand. Another important function and by-product of self-monitoring is a decrease in unwanted behaviors. Take for example smoking reduction programs. Many will utilize self-monitoring, which helps the user reduce the frequency of smoking. With the expense log, I can decide what I want to spend my money on and how much before it ever leaves my wallet. I'm responsible, accountable, and in control.
3. Better planning. The information I track can be helpful for planning investments, vacations, gifts for the holidays, etc. I feel more confident in going into a venture when I know what my means really are.
4. Increased personal and financial growth. I can make money however I want. I don't have to rely on my job's salary. I can write a book, or sell songs on the internet. I'm more willing to look for opportunities when I see a list a projects that I am currently implementing and involved in, and that are turning out to be viable. For example, with the income log, I can add categories whenever I want to add an income source. When I add an income source and see the income every month, I feel like I've grown (personally and financially).
5. Increase in my creativity. OK, this may not be useful for you, but I really like being creative. Exercising my mind helps me see things that I didn't see before. More ideas and therefore opportunities pop up like wild-fires. There is a sense of rejuvenation that comes with doing something creative. There is a renewed interest in life that overtakes me, and I feel proud of my accomplishments. It adds to personal growth. I can create opportunities for income, or I can create a color scheme for the template that is pleasing to the eye (yeah, that one's very subjective). It's all good.
Download The Income And Expense Logs (Templates)
Income Log Template (Excel)
Expense Log Template (Excel)
Let me know how it works for you, any problems with the downloads, etc.
Cheers,
-RY
Now imagine you are about to enter into negotiations to get the ball rolling, sign all the paperwork, and finalize the deal.
The process will require that you know where you are, financially.
Can you afford the investment? How will you finance it?
In order to have the answers to those questions, it may be helpful to know:
What are the sources of your income?
What are your monthly expenses?
In our monthly meetings at Shifting Paradigms, we review several potential investments related to our goals of passive income and financial freedom. At this point, some are way too costly to invest significant time and energy towards. And some are within our reach, but require lots of research and re-organization on our part in order to make an investment opportunity a reality.
Recently, I decided that I better get my financial butt in gear. I needed to know exactly where I stood, financially, in order to get a better picture of what I needed to do to plan accordingly for investments.
Coached To Earn What I Deserve
A few years ago, I hired a life coach. One of the exercises that he encouraged me to do was to get better control of my money. This was at a time when I was neck high in bad debt (i.e., mostly credit card debt incurred as a college student; good debt, by the way, would be like the mortgage on an investment property). He suggested a book called Earn What You Deserve by Jerrold Mundis. It's an easy read, full of great exercises that are practical, yet powerful in helping you see your potential as an earner. Plus, it's really at a cheap price! I continue to apply the author's lessons today, such as my favorite one that goes, "NEVER TURN DOWN MONEY."
One of the exercises in the book explores the use and benefits of "spending plans." They are akin to monthly budgets, but without the connotations that "budgets" have. For example, if I were to budget for next month's groceries at $150, and actually spent $200, I might feel disappointed that I went over-budget and feel that I have no control over my expenses. But if I "plan" to spend $150 on groceries and actually wind up paying $200, I won't feel like a failure, but rather use that information not only to create next month's "spending plan," but to improve my overall sense of who I am in regards to what kind of "spender" I am. That ultimately adds to my personal growth.
And I believe it did.
In actual use, the "spending plans" (over 6 months) helped me go from:
EXPENSES > INCOME
to
EXPENSES = INCOME (roughly equal for one month)
to
INCOME > EXPENSES
One thing I was particularly proud of was that I was able to curtail my monthly grocery expenses to under $100, and I didn't starve. I was still able to eat at least three meals a day, and eat the food I wanted. I just didn't spend money on groceries that wound up rotting in my fridge, or becoming upscale condos for the ants and cockroaches in my cupboard!
I stopped using the spending plans a couple of years ago, but have recently renewed my interest in them.
Finding My Money
Over the past couple of years, since stopping the use of the spending plans, I really had no idea of where my money was going. Sure, I knew when I went to Radio Shack to buy audio equipment, or when I went to Home Depot and bought new sink fixtures. But I really couldn't see the amount of what I was really spending until I put it on paper (or actually on my computer screen).
Since starting back up with keeping a log, I have been dumbfounded at how much money actually leaves my pocket/wallet every month!!! The "little things" really add up. They add up so much that I didn't realize that for this month alone, there were several thousands of dollars that left my wallet! Holy sh*t, Batman!!!
Ok, enough of my griping. But what this information about my spending does for me is help me to realize where my money focus and energies have been for a while. It's not bad that thousands of dollars where flowing out of my left pocket (that's where I usually keep my wallet), it's useful information that will help me re-organize and become a better planner, better manager, and better controller of my wealth.
But I am not only keeping track of my expenses. At the same time, I instituted the use of a monthly income log.
A monthly income log???
Yep. Just like I thought I knew where my money was going without the use of an expense log, I also thought I knew where my income was coming from. Shoot, I mean I'm a nurse with a salary that gets paid every two weeks, so nothing to think too hard about, right?
Once I started thinking about all my income sources, I realized that I had acquired sources of passive income that I didn't consider before. And once I started recording this in an income log, I realized that my monthly income was more than just my work salary. Nothing too significant at this point in time, mind you, but do you know what it feels like to realize that you have more of anything than you originally thought? It's a pretty damn good feeling.
About The Templates, Please Read Before Downloading
I've uploaded the templates (see below, with screenshots) that I currently use to keep track of monthly expenses and income. They're very simple with no extravagant formulas. It's basically made to add up the columns and the rows. As soon as you input data, the cells with formulas (indicated by a green tic mark in the corner of the cell, at least on my computer) will automatically adjust.
You can change the headings and category names to fit your situation. I only have those there as place holders and to give you some ideas of what you may want to keep track of. For example, I added an "Accounts Receivable" category to track what money is owed to me. I then added an "Accounts Paid" to record what money was paid to me by debtors. It's a neat little extra that I added, thanks to my early days as an accounting major in college. But it gives me an even more accurate idea of where my money is.
And no, those numbers and figures are not real. I just made those up for demonstration purposes.
Also, I created these on a Mac, using Excel 2004 for the Mac, version 11.3.3. That's the latest version for my computer. I ran the compatibility report for Windows-based PC's and it stated that some of the formulas may not show up correctly for those users.
Hey, I'm just trying to share the knowledge here for free, so if you download it and it doesn't work, I'm sorry. I also can't guarantee that your virus detection software won't go crazy when you download this, or that the alert in your version of Excel won't tell you that this file contains "macros, beware." As far as I know, I don't have any viruses or anything that will cause harm. I've exchanged files with PC users many times over the years with no problems. But if you're concerned, don't download it. Try getting a Mac. They're a lot cheaper (in the long run) than you think. Otherwise, you may be able to make your own templates using the screenshots as a guide. Or you can search the internet for one that will work for you.
The Benefits of Organizing Finances
With that said, I hope that these will turn out to be as useful for you as they have been for me. Through the application of these templates, I have been able to gain some personal benefits such as:
1. Seeing where I stand. Indeed, self-monitoring forms and logs have an instant effect of providing you with a quick snapshot of where you are in life, or at least in one area of life.
2. Better control. I am in a much better position to take control of my finances because I have a clearer picture of where my money is, where it's coming from, and where it's going. I don't feel like I have no say in my finances. I also feel like my expenses don't get out of hand. Another important function and by-product of self-monitoring is a decrease in unwanted behaviors. Take for example smoking reduction programs. Many will utilize self-monitoring, which helps the user reduce the frequency of smoking. With the expense log, I can decide what I want to spend my money on and how much before it ever leaves my wallet. I'm responsible, accountable, and in control.
3. Better planning. The information I track can be helpful for planning investments, vacations, gifts for the holidays, etc. I feel more confident in going into a venture when I know what my means really are.
4. Increased personal and financial growth. I can make money however I want. I don't have to rely on my job's salary. I can write a book, or sell songs on the internet. I'm more willing to look for opportunities when I see a list a projects that I am currently implementing and involved in, and that are turning out to be viable. For example, with the income log, I can add categories whenever I want to add an income source. When I add an income source and see the income every month, I feel like I've grown (personally and financially).
5. Increase in my creativity. OK, this may not be useful for you, but I really like being creative. Exercising my mind helps me see things that I didn't see before. More ideas and therefore opportunities pop up like wild-fires. There is a sense of rejuvenation that comes with doing something creative. There is a renewed interest in life that overtakes me, and I feel proud of my accomplishments. It adds to personal growth. I can create opportunities for income, or I can create a color scheme for the template that is pleasing to the eye (yeah, that one's very subjective). It's all good.
Download The Income And Expense Logs (Templates)
Income Log Template (Excel)
Expense Log Template (Excel)
Let me know how it works for you, any problems with the downloads, etc.
Cheers,
-RY
I appreciate this post very much. Earn What You Deserve by Jerrold Mundis is going on my reading list right away.
The life coach idea is really interesting. At work, I just joined the mentoring program, which is quite productive; however, I'm sure the life coach would offer a broader perspective.
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Bill...I think there is value in learning someone else's views about what's going on in your life, whether a life coach, a mentoring group, or a good friend. My life coach helped to open up my mind to more possibilities.
-RY
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Glad to see this entry.
i have enjoyed my visit.
what you said is much helpful to me.
i really had no idea of where my money was going.thanks for the methord about using excel.
o(∩_∩)o...哈哈
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