Photo credit - @the_chiman (instagram)
"Money won't make you rich..." - Sunday AdelajaHey champ! How has your week been?
First allow me welcome you to December of 2016. The count down has officially started 30 days more... Few days ago I got a copy of my bank statement for review and auditing. It's a habit I've built over the past few years... What I usually do was to keep track of my expenses on a note pad, then i upgraded to excel sheet but with Internet and mobile banking that you can state the reason for a transaction it's easier for me to keep track as I make sure that most of by transactions are either via transfer or a check for auditing reasons. Why do you need this? There are a lot of reasons but u would share a few here; 1. Helps you determine what you spent on the most Many folks spend on impulse or most times they take a look at their account and start asking; where did my money go? This is very common with employees and growing entrepreneurs for a lot reasons including bad debt (see this article: GOOD DEBT, BAD DEBT: Creating the Mind of an Entrepreneurial Employee) In 2015 debt was one of my major set back and many of such debts were bad ones. the painful part was that i am informed about this but i got played alot of emotional cards that made spend on what seemed to be a "good deed" at that time as against the financial discipline rules but after my self audit at the end of 2015 i am pretty sure you can guess what happened. The self audit informed me what i was spending on the most; "bad debt". So now ask yourself, what are you spending on the most this year? Is it adding money to you or taking money from you? 2. Helps you set your new financial goal and strategies to hit it. My regular audit helps me set my new financial goals. Looking at my expenses of the past months, quarter or the year it helps me determine how much i need and what strategies to put in place to hit that target. After my financial ordeal in 2013 ( i would share the story some day), i did a financial self audit and being in a financial mess i had to set a goal for the following. Suffice to say that is the year i got contracted for a 7-figure per annum job because i had set a 7-figure financial goal because at that point in my life, it was only a 7-figure payment that could get me out of my financial mess. Having the goal made me make moves towards achieving the goal using my knowledge in value-adding network. ("Value-Adding Network" ...the book coming soon) 3. Informs you whether to maintain your current spending plan or improve on it. Your current spending plan can and would define your financial life every single year. If your current financial plan puts you in a place you don't want to be (below poverty line) then you should know what to do. Just to give i little peep into what your financial life should be... allow me share this with you...Assume you earn a pay check of around a hundred thousand naira or dollars (N100,000 or $100,000) as the case might be whether from a 9-5 or a business, what is your spending plan in terms of percentages? According to Cornel Agwu a financial fitness expert, he suggested a CPL spending model that could help you cross the poverty line. So using the example of your 100k earnings here is a breakdown he suggested; Household Expenses - 30% Investment - 20% Personal Utility - 13% Food - 11% Benevolence/Charity/Religious Givings - 10% Entertainment - 5% Pay Yourself - 5% Here is the punchline, if you audit your account and it is far from the above then you sure know you are spending wrongly and your should take proper financial adjustments Now you know what happened to your money i guess, so what are you going to do? Let me know in the comment box if this was helpful or if you have questions Cheers!