5 Reasons Why You Need To Know Where Is Your Money

One of the comments I got from a friend who's been reading the Where Is Your Money series in this blog is that she doesn't feel the need to go through all the efforts of finding out where her finances are in the short-term, let alone go through the process of recording her daily expenses. She reasons that for as long as she tries to spend wisely, she would be okay in the short and long term.

Rather than say she's mistaken in her viewpoint, I would rather point out some of the benefits of taking stock of your short-term finances, the way we've been discussing over the past weeks:

1. You aren't really sure unless you can see it. Think you haven't been running through a spending spree? Maybe you haven't been doing it in a day, but the little things here and there everyday do add up, oftentimes unnoticed.

2. You don't know where to make changes. This one flows from the first reason. Without some information on your spending patterns over a period of time, you won't know what changes you can make to free up some cash or use your money more wisely.

3. It starts with being faithful with the little. You've probably heard it said: penny wise, pound foolish. True, some people can be so careful with the small details, and mess up the big things in their lives. But I doubt if you would ever hear a saying that goes something like "pound wise, penny foolish".

4. The details are not the end in itself. For most people, a budget simply shows them where to cut back and what to modify. That by itself can already provide significant improvements to one's finances. But financial planning takes more than that. And knowing the details of one's finances provide the information one needs to prepare for such things as how much should you have in an emergency fund; knowing what, where, and how much to invest; contributing to a retirement fund; and others. All of these and more we will tackle one by one in future posts.

5. Lastly, good habits beget good habits. The discipline of being aware about one's finances rubs itself off to other areas of one's life, as well as the lives of people around us. Hopefully it can affect for the better the way we handle other areas of our lives, bringing us closer to the essence of true wealth.

I hope that this post could convince my friend and you as well. It's never too late to start taking better care of your finances.