Document Everything to be on Top of Your Finances

documentation

Documentation is really important when you are doing your finances. Doing your finances isn’t exactly something people enjoy, and that is often because they don’t have enough information and knowledge about it nor do they know tricks to make it easier.

I have always believed that whenever an idea strikes, putting it all on paper is the best way to go. That is how I approach my finances as well. Having everything laid out will give you a clear idea as to what is needed to make the best budget plan.

You will get to see all the pre-requisites right in front of you and it will give you a pretty good clue of how the cashflow occurs in your month  You will be able to calculate the cash flow taking into account all the incoming and outgoing transactions. You will be able to dissect all your spendings and categorize them to take a closer look into what area needs more work.

“I’m a hoarder. For me, documentation has always been key, and I’ve kept everything from my past.” -Diane Keaton

The only hoarding I don’t mind is the bills. Hold onto all your bills especially if you pay cash so that you don’t forget the purchases you make. This will help you make a more vigilant budget at the end of the month or the beginning, whenever you sit down to review your finances.

You will not be moving forward with an unrealistic approach toward your budget planning. Making a budget and allocating money to each area of your life like the needs, wants, and savings on a document and then keeping on visiting it from time to time will help you stay true to your financial decisions.

Whenever you feel like you are going off track with your spending, you can revisit this document to remind yourself what you planned and what you need to do to maintain your financial health.

Planning on Real Data

Whenever you think of making big changes in your lifestyle or the way you handle your finances, you often hit the bump of uncertainty. If you maintain a file – whether a hard copy or soft copy – you can always refer to it when making financial decisions. This gives you certainty and confidence in whatever decisions you make.

You also have more trust in your decisions because you can base it on real data and not just something you heard someone say works for them. Just because something works for someone else, doesn’t mean that it will surely work for you. Make sure a new technique, trick, or method is going to benefit you based on your financial track record.

Final Thoughts

Documenting all your earnings, spendings, and savings isn’t exactly difficult. You just have to take a little time out every week and review the results every month. I, personally, record my daily expenses and then tally it at the end of the month. This helps me make sure that I don’t go over budget and if I do then I can plan how to make up for it in the coming month.

Why is it Difficult to Manage Your Finances Well as a Start-Up?

money

Have you ever heard anyone say that they want to wake up every single day and stare at their dwindling bank balance? Especially a business owner or start-up founder? No one ever has and no one ever will. Especially if you are hell-bent on living a financially cushioned life (who isn’t?) and leading your business into profit.

It can take a lot of discipline to keep track of the finances and make smart decisions all the time. Especially, when you know that your expenses are getting out of control and you don’t have the funds to back it up – this is a common problem with start-ups.

Most start-ups face this issue of managing their finances. Someone who is new to the entrepreneurial world and doesn’t have much knowledge of money is more likely to be broke or go through a major financial crisis than someone who knows the ins and outs of managing the cash flow. Being educated and informed about personal finances is key to keeping the asset column healthy without compromising with the success or becoming mentally frustrated.

Mental agility, determination, and financial know-how helps start-up owners keep their asset column healthy. It is never a great idea to spend your hard-earned money on things that are not going to serve you in the long term – this has to be applied when starting a business as well.

Many startup founders take unwise decisions because they read about what one of their ideals do or how they live or something they are interested in. Earlier, resources were limited and there was no internet connectivity in most parts of the world, so only a fortunate few got a glimpse in the lives of millionaires. 

But now, you have all the resources and information that is required to become a millionaire; and also to follow a millionaire’s lifestyle. This can be used as motivation but most people are blinded by the shine of the diamond and forget all the hardships that made the diamond shine.

Most millionaires buy houses and expensive cars but they don’t break their savings to do so – you might want to follow their lifestyle but you also need to take the incoming cashflow into account if you are trying to impersonate the outgoing dough under the guise of a successful person’s lifestyle. They have money coming in from various investments that take care of their need to live a luxurious life and start-up owners often don’t, so, if you try to walk in their shoes, you can’t pick and choose according to your convenience.

“Our incomes are like our shoes; if too small, they gall and pinch us; but if too large, they cause us to stumble and to trip.” -John Locke

Of course, money won’t come pouring in just by knowing how to manage your finances, you will have to face the adversities and challenges that you are likely to face on the road to success. But by impersonating and walking in the footsteps of successful people, you can set up a good platform for yourself, only if you take into account the bad as well as the good.

Final Thoughts

Yes, it is difficult to manage your finances and make smart decisions all the time as a start-up. You are bound to make mistakes but those mistakes should teach you a valuable lesson. If you don’t learn anything then the difficulty can turn into impossibility real quick. Keep learning from the people who have made it but let the shine of their own car and assets blind you.