Monday, December 8, 2014

Bucket System Series - #1 First Things First


Throughout my experimentation with this whole freedom ideology, I've tried out different financial tips/habits/tricks/advice.

Some work and some don't.

I've decided to crystallize those that work into the 'Bucket System Series' - a continuation of the Bucket System (read it here if you have no clue).


"So, first things first...check your temperature"

You understand how the bucket system works. It makes sense to you. But where do you start?

*****

1) Establishing Measures


If you are having a fever, the first thing the doctor will do is to take your temperature. Perhaps he will stick a thermometer into your mouth and prod you in a few places. This gives him a good measure of your existing condition.

"Err, thanks for the education...I didn't come here for Year 1 science"


But why aren't you doing the same with your finances? 


You're in a bad financial position, in debt or are simply unhappy with the state of your finances and you mean you're not tracking your finances? 

See how silly it all sounds now?

The only way to know if you are progressing is to measure and track the dollars that go into and out of your life. 

Not only will it make you more aware of your current financial situation, simply tracking your finances everyday will help you to make better financial decisions. I strongly believe that there is a psychological effect of consistently tracking your finances on your overall financial well-being.

At the end of each month, you will be able to see exactly where your money is leaking and you have a chance to patch it up.


"Not knowing where your money is leaking = not knowing where to patch things up."


The best way to track your finances in this day and age is to download a money tracking app on your smartphone. I mean any one money tracking app out there is good enough, although I do enjoy using this app MoneyIQ.

You can see my progress over the past year here (read: freedom fund).

Am I progressing? Hell yeah, but we'll keep the details for another day.



2) Identify The Big Ticket Items


With just 1 month's report, you'll be able to identify the big ticket items. I've written a post on this before but as a summary, always tackle these big ticket items first.

Find ways to eliminate/reduce your spending on these items.

And I promise you that you will see significant changes in your monthly spending.



3) Perpetuate The Habit


If you can see the benefit of tracking your money for 1 month. What do you think will happen if you have 1 year's worth of data?

I know it is difficult to track every single dollar. But do the best you can.

Make it a lifestyle, a natural habit to whip out your phone and record your expenses immediately.

Just do it daily, after a while, it will stick. 

"People often say that motivation doesn't last. Well, neither does bathing - that's why we recommend it daily" - Zig Ziglar

Nobody said this was easy.

If you're not willing to put in the effort, forget about freedom. 

You're on the wrong site.

Just keep doing what you are doing and run on that damn corporate treadmill.






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