I hope you took the wealth builder test I posted last week. If you didn’t, then take the simple 30-second quiz. Congrats and keep going if you answered YES to all five questions. I suppose some of you had a NO or two, or at least had a few areas of concern. Either way, you’re committed to moving forward in your wealth building. Sadly, only a few will truly maximize and/or stay on their wealth building journey simply because they can’t get overcome that One Big Obstacle.
Say you’re headed down the highway with a posted speed limit sign of 70mph. You glance at your odometer, which reads 75. In a split second you slow down to 70 mph to match the speed limit sign. What just happened…. financially speaking?
The posted speed limit sign became your “budget”– the target. Your odometer represented your “actual results”– feedback. The difference between the “budget” and “actual results” is the “variance”. When you were able to clearly see the variance, two extremely important things happened: “accountability”, which was quickly followed by an “adjustment” to bring you back in line.
No chaotic flashing lights in your rear view mirror!
The One Big Obstacle that causes people to fail or to not maximize their wealth building potential is they lack accountability followed by adjustment. Almost everyone has a budget (speed limit sign), but rarely do we have the actual results (odometer) which creates accountability where we evaluate the variance (the difference between the speed limit sign and odometer) to make adjustments to keep us on our wealth building journey.
Makes sense to me! (Please tell me you are nodding your head up and down. This is a game changer!)
So how do you overcome the One Big Obstacle? How do we get accountability followed by adjustment?
You develop a monthly budget for every income dollar coming into your life business; track the actual results of every spent dollar; evaluate the variance and make adjustments.
Get a free download of my Step 7 Business Profit Report which will show you how to set up a winning report. A picture is truly worth a thousand words, or in this case, an Excel spreadsheet.
But we have an elephant in the room!
When I present this to most people, they usually feel pretty good about making it happen. And then reality sets in. How can you possibly track all these numbers and live your life?
Good news. Quicken Deluxe For $74.99 you can have a personal software program that will generate a report that looks a lot like my Business Profit Report. At the beginning of the month you set your budget, once or twice a week you download your actual financial activities (deposits and expenditures), assign a category name to each deposit or expense that match your budgeted items, and then at the end of the month Quicken will give you a report that shows your monthly budget compared to your expenses with the variance. Can you say WOW?
Imagine it’s time for your monthly meeting to review how you did financially last month. (Remember Step 4, Run Your Life Like a Business?) What if you had a report that showed your budget, spending, and how they compared to each other? Do you think you’d start making different wealth building decisions?
A few simple guidelines to keep in mind:
• Only use one bank account. No “his and her” accounts.
• Use debit cards only.
• Limit your budgeted expenses to 20-30 categories.
• Give yourself 90 days to master the software.
Here’s the deal…………It’s absolutely crazy for you to be running wide open down the wealth building super highway without a financial odometer. I can assure you that sooner or later those chaotic flashing lights will chase you down.
I leave you with this: Remember the first high-tech cell phone you got? Why did you devote all that time to figure out how to use it? Simple answer. You understood the benefits of the phone. Same thing applies here.