Take Control Of Your Finances
What does it mean to take control of my finances?
Taking control of your finances means quite simply that you know what's going on with your finances. You know how much you're making. You know how much you're spending. You know the areas that you're spending money in, and you know how much you own - what your assets are. You also know how much your credit card debt is, and how much you owe on your house or your auto. Taking control of your finances is just really becoming clear: "Okay, these are my finances. I know where I stand."
What is a 'spending pyramid'?
A spending pyramid just illustrates the flow of funds. Picture a pyramid, an inverse pyramid, where at the top of it, it's the wide part. That's where most of your expenses go, and as you get farther and farther down to the point of the pyramid, you have fewer dollars to spend on those areas. A common spending pyramid is where most of the day to day living expenses are at the top - that's where most of the money goes - and at the bottom of that, where you have very few dollars, that's where you have saving for retirement, and saving for your goals, and saving for the emergency reserve. It's as if we spent all of our money just kind of getting by and on frivolous things and we have just a little bit of money left for the things that really matter. There's the common spending pyramid and then there's the optimized spending pyramid, and what that looks like is - still it's an inverted pyramid but now we have more of the things that are of value, the things that we really want, our goals higher up on the list and the frivolous things much farther down on the pyramid.
