If you want to turn your money into wealth, you should know what puts money in your pocket and what takes it out, Annet Katusiime writes.
The fulfilment of earning money is when you have put your money to good use.
Before I appreciated the skill of writing down all my expenses daily, my financial life was a mess. I was working hard day after day but gaining little. Over and over again, I felt my energy levels going down thinking where does my money go?
I would do a self-check after three months but a year would pass and there would be nothing achieved.
The truth is I was paid all my money but the problem was how I handled the money. This is very common to salary earners knowing there will always be a pay cheque at the end of month so you ably survive up to the next month.
Ask yourself: For how long you will live in the dark without knowing where your money is going?
It is very dangerous when you can’t see where your money is going because it does not give you a clear direction to your journey of financial independence.
For the past three years, life has improved after appreciating the skill of writing down all my expenses daily. It is friendlier with my pocket size booklet that has become my best friend which I have to move along with in my bag every day.
A spending record is necessary to create a spending plan. One of the most important things you can do when trying to get your personal finances under control is figuring out where all your money is going each month.
Tracking your expenses daily can really help you save a lot of money.
Most times we are prone to impulse spending. When you have a record of what was spent, you can realise that what you spent on was not a necessity. Such records help you make better decisions next time by sticking to priority items which are mostly needs or value items first.
You can confidently set and meet goals when you know where your money is going, for example, if you want to start building a house and you estimate 100 bags of cement can work on the foundation and raise the house to the wall pallet.
If a bag of cement costs Shs30,000 (calculate the break down), there is more to earning money than seeing your dream come true. This gives you more energy to do more with your finances in a smart way.
What do you spend on?
I had a bad habit of buying clothes on impulse until I realised I had too many but used a few of them.
I then reduced my wardrobe to charity and remained with what was specific, important and created space for improvement.
Recording my expenses was an eye opener. I realised I used to spend half of my salary on clothes.
After working on that bad habit, I saw my money coming back to me. What a relief!
Did you know if you had Shs1b and Shs100 went missing, it will nullify the Shs1b? That’s the power of every coin you don’t monitor.
How often do you get your bank statement to cross check those monthly charges to see there hasn’t been an over charge on your account? Keeping track of your expenses and financial information means you will be aware of where your money is going and what is left.
Tracking your expenses daily can save your money and help you set financial goals for your future.
If you do it more often, it can give you an estimate of how much you need to spend in a month which can help you estimate your yearly expenditures thus being in control of your finances.
Therefore, start recording every expense.
Annet Katusiime is a certified financial literacy trainer: firstname.lastname@example.org