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.
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.