I am going to share with you the secret to achieving financial success. The secret is universal, and is adaptable to your personal definition of success. For some, being financially independent would define being successful while for others, being able to give their time to charity would mean they have become successful. There is a common thread for every financially successful person I have ever met.
My mentor once told me a story that highlights the secret. A woman told him that she had lost 10 pounds. When he asked how, she simply replied that she had downloaded an app on her smart phone. This was puzzling to him, so he asked what she meant. She again replied that she had downloaded an app 3 weeks prior, and had subsequently lost 10 pounds. He finally asked what the app did, and she said that it allowed her to track what she was eating.
For years, researchers have been trying to find the secret to losing weight. Is a high protein diet better than a high carbohydrate diet? Is 30 minutes of exercise every day better than 1 hour every other day? What they have found is that tracking what we eat is the number one way to lose weight. By having an awareness about where the calories are coming from, it allows us to make natural adjustments that we can actually incorporate into our lifestyle for the long-term, which is more than can be said for most diets.
So what is the secret? What can this story and research on weight loss teach us about achieving our financial dreams? The secret is that tracking your spending will lead to financial success.
I know, this is a bit of a letdown. The secret is fairly boring, and you probably could have come up with it on your own. But my question is, are you tracking your spending? Do you know how much of your income is being spent on food, housing, or entertainment? Do you know how much you pay in taxes each year? So why is tracking your spending the secret to financial success? Because it builds an awareness of where your money is being spent. It is too easy to spend money a little bit at a time, and by the end of the month, have no idea where the money went.
If you want to take control of your financial situation, the first step is to track your spending. There are a lot of ways to do this, and we will go through different ways in a future post, but you must find a way that works for you. There is no one-size-fits-all solution. I can also assure you that tracking your spending will help to overcoming many of the obstacles associated with creating and following a budget.
I challenge you to track your expenses for the next 3 months. I’m not asking you to follow a budget, or to cut your spending. Just track where every dollar is going, and let’s see if you begin to make any positive changes.
So, are you willing to accept my challenge? Are you willing to test if this really is the secret to financial success? What do you have to lose?
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