Videos | January 5, 2012

How to keep track of finances

Managing your money is all about understanding your cash flow.

Set time to work on your finances
With work, responsibilities, family, friends and taking time out - there is no question our lives are busy. But if you're disciplined enough to go to yoga class every week (or another appointment of your choice), chances are you can set aside a fixed day and time to keep track of finances a few times a year. And by making a concrete time, it's more likely you'll actually do it. Add it to your email calendar. Tape a reminder to the fridge. Get mobile technology onboard and download a procrastinator app, such as the one by behavioural economist and author Dan Ariely.

Review your game plan
When reviewing your finances, look over the budget and ask "what's changed in my life?". Think not only about big life events (such as a new child or home) but smaller changes as well (such as a new gym membership or promotion). It all affects cash flow. Your stage in life will likely influence priorities - with new parents often looking ahead for a larger car or family vacation, while retirees might have lower living expenses and be able to spend more of their budgets on leisure. Keeping track of your finances means understanding how changing circumstances influence your different 'buckets' of spending and being smart about what how much you spend on what. For beginners, tips on making your first budget are in the separate budgeting video.

Check out what’s not working
During your regular budget review take a look and see if there are any parts of your plan that haven’t been coming together. If you budgeted €200 a month for savings but you’re short €50 every month take a close look at expenses and find out why. Adjust your budget (or your lifestyle) where needed.

Procrastination is your enemy
Setting aside a set time helps to overcome one of financial planning’s biggest enemies – procrastination.
Behavioural economists have long known that many people – the rich and the not so rich alike – have a tendency to put off financial planning and financial education. An eZonomics poll found 30% of respondents admitted putting off an important financial decision for months or years.
There’s a cost in not acting. Making time to keep track of your finances is the first step. If you do it regularly, the short- and long-term pay offs can be significant.

BudgetGoal settingProcrastination

eZonomics team
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