By: Shane Bender
I am going to be late. Again. Hurriedly, I left my McDonalds meeting so I wouldn’t be late to the networking meeting I was attending for the first time. When driving to the meeting, I saw a sign for 30mph. That just seemed too slow for the road I was on, so I didn’t heed to it. I had 3 minutes to get there. Suddenly coming on the other side of the road was the Southlake police. The lights went on, and I knew I was busted. Of course, I got a ticket for going 12 mph over the speed limit and was late to my meeting. I have a tendency to be 5 minutes late to meetings. It is a bad habit for sure.
I came across a book called “The Compound Effect” by Darren Hardy. He mentions tracking anything you want to change so you are more aware of them. We all have habits that can be improved in finances, health, relationships, or spiritually. One area that I have expertise in is financial tracking. I actually find it enjoyable. How can tracking your finances help you be more successful and give you freedom? Whether you are a business owner, a contractor, or manage your family finances, all these reasons apply.
Over-spending is very easy to do. Have you ever been on vacation and not tracked what you were spending? Everything seemed overpriced, but you paid for it anyway. Once you got home and looked at the credit card statement, you were amazed at how much you spent. It is so easy to overspend when you aren’t tracking. I remember a few years ago, my wife and I went through the “Total Money Makeover” by Dave Ramsey and put cash in envelopes to spend for the month so we wouldn’t lose track.
In a business, it is difficult to do everything with cash. How do we keep track? Quickbooks and other accounting software make this easier by automatically downloading all credit card and bank transactions. You just need to regularly enter the purpose of the expense and an account category. Doing this weekly or at least monthly will be essential for the success of the business. You can curb wasteful spending before the problem gets out of hand. It seems simple. Some of you probably think this is elementary, and it really is pretty basic. The problem is that life gets in the way and all of a sudden, you haven’t looked at the finances in months. The amount of money wasted during this time can be costly. In business, it might even mean you missed billing a client and will never collect the cash.
Tracking can be quite motivating. Knowing your revenue, expenses, and profit for the month can be depressing or possibly exciting. Each way is quite motivating. If you are bleeding through your cash and the trajectory is bad, it will motivate you to find ways to bring in more income (revenue) and/or decrease expenses. If you are seeing profitability or revenue growth, it leads to new opportunities. In business, this could mean expansion, hiring, or even setting up a SEP (Simplified Employee Pension Plan) or 401k to diversify, save for retirement, and save money on taxes.
Tracking helps with prioritization. It can be difficult to know where to start to increase revenue or decrease expenses. We all need to understand how much spending is changing month-to-month or year-over-year. Look at the largest expense areas to find ways to save money. For increased revenue in your business, track where you are getting your leads and how leads are turning into clients. Put together a pipeline report of opportunities and where you are in the process of getting the new business.
Tracking helps with focusing on the goal. Any goals should be measurable and should be tracked regularly. If you read any of my other blogs, you know I like “The Freedom Journal”. The point of this journal is to write down your goal every single day for 100 days. There are 10 sprints that are 10 days each. I even found it helpful to write down my 10-day sprint goal each day. This level of intense focus will require tracking to ensure you are focused and on track to meet the goal.
Who doesn’t want more cash in their business, personal life, or even nonprofit organization? Cash brings freedom. We talked about increasing profits to increase cash, which certainly helps. Sometimes cash is lost because businesses don’t invoice correctly, don’t follow up on collections, or don’t manage their cash flow well. Maybe, just simply having a good company purchasing card with rewards helps cash flow. Also, shopping around to find a better interest rate helps. I increased the interest income of a church by 0.75% by finding a better interest rate for the nonprofit. This one change brings in over $10,000 in more interest income (cash).
We all want freedom and peace. Why not track your spending and revenue development habits? As I mentioned before, I am working on my habit of being late. I am keeping a notepad in my car to write down how many minutes I am late or early to each of my meetings. I have a section where I write down why I was late or early. What can I do to fix this and take responsibility? Since I have been keeping track, I have realized it is all my fault. I had blamed traffic, other people for distracting me, or workload. When I get down to it, it has to do with my planning and focus to be on time. When I am early, I have more energy, peace, and freedom. Also, I am sure it makes a better impression.
Consider the benefits of tracking so you can eliminate waste, improve prioritization, increase motivation, enhance focus, and grow your cash.
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