When you’re watching your favorite mystery show, you often have to follow the money to find the motivation for the plot. The best espionage or bank heist plot almost always revolves around the money trail, and as the viewer you need to follow the money to get to the bottom of the case.
What you may not realize is that the same tactics apply in your own life and in your financial planning.
Follow The Money
Here’s an example – let’s say you estimate that you spend $10,000 per month, while your take home pay is $15,000 per month. This should be netting you an extra $5,000 each month which could you be saving and investing. However, you find that you’re not saving that much – or worse, not saving at all. How does that happen?
You need to follow the money. Track your expenses, and you’ll likely find that you’re spending more than you are estimating each month.
Here’s another example that you may resonate with. Let’s say that you have $30, 000 in credit card debt, but you’re sure that it just came from a one-time event and that you’re actually good with credit cards and that you can pay it down. When you check your credit card statement in a year, and it’s up to $40,000, you need to follow the money, and see if you’re continually adding to that debt and living above your means.
How To Follow The Money In Your Life
In your own life, following the money is as simple as taking an active interest in your own finances. It means you can’t bury your head in the sand and ignore your financial situation – instead you need to take part in your finances and at times, yes – track your expenditures and income so that you can see where and how you’re spending and saving.
Following the money in your own life will help you to see patterns so that you can correct them if you need to, and if you have trouble doing this on your own, enlisting the help of a financial advisor may be useful as they can guide you with this exercise.
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