Trading Time or Buying Freedom

Managing is important and is the prerequisite for measuring. This is a common business phrase. Most people in business are aware of this phrase: “What’s measured gets managed, and outcomes improve.”

Very few people, though, apply this to their real lives, and even fewer people use this idea to manage their personal finances and their health.

Why tracking your expenses is essential

As is often the case, simplicity can be your magic win. Wisdom from a guru is unnecessary. Just track your money: what’s coming in and what’s going out. Also, don’t forget to track your calories. Apparently, we overindulge mostly in sugar and carbs.

Think about it. Doctors record a newborn baby’s length and weight during its very first days. This becomes the departure point for growing up. How is the baby growing? We don’t use assumptions; the baby must be weighed and measured.

Now imagine arriving at the airport with your luggage and saying to the airport staff, “Please don’t worry about my case; it’s not heavy.”
No, my friend. We don’t want to overload the plane. Put your case on the scale.

Measuring shows where you are and where you’re going

Measuring gives us a picture: where we are, where we are coming from, and where we are flying to. It’s okay, I see you are a first-class passenger; it doesn’t matter. We still need to weigh your luggage. Guessing games are what others play with their personal finances. Please don’t be like that.

Know your net income before budgeting

How much is your salary?
Yes, the net salary, the money you physically take home. Don’t stress about the gross for now; the tax man is yet to take his cut.

Obviously not physically taking cash home, unless you were me in 2005. I carried my salary in a backpack in bricks of cash. That was in Zimbabwe. No one robbed me, by the way. Guess what, even a criminal had his heavy case of cash to do groceries.

This happens when measurement is neglected. Managing becomes impossible. What had been a prosperous economy was reduced to bricks of valueless cash with lots of zeros.

Don’t get me started on politics. I am a personal finance writer. Join me for a braai for some political talks if you are keen later.

You have to measure everything worth managing.

To manage life effectively, you must measure things.

Take stock of your finances; that’s all I am saying.

• Do you have debt?
• How much is your debt level?
• What is your net worth?
• What does your lifestyle cost?
• What’s your budget? Do you even have one?

Don’t tell me you don’t know, please.

If we cannot answer these questions, we might as well give up on trying to manage our money.

Personal finance has prerequisites

You must pass a prerequisite subject before you can enrol further; there are no shortcuts.
If you want to enrol in personal finance management, you need to pass the measuring module first. That means tracking your money comes before anything else.

Most people don’t like the measuring part. We get fired up about managing. That’s why people fear bathroom scales or blood tests.

We often think that avoiding something means it doesn’t exist.

Debt doesn’t work like that, my friend. The bank knows your address. In fact, they could take your other assets. Not scaring you, just being realistic.

Mashonisa is not your cousin either. Might be, but in money, blood is not thicker than water.

How measuring your finances builds financial discipline

Set your targets. Review your finances. Measure everything. Reporting and measuring are part of the job, too.

This reminds me of school. I hated technical drawing and preferred drawing to measuring angles and lines. Was more like a sketchy artist.

Personal finance is not like that.

Follow this approach at your own peril. Personal finance requires measurement, planning, strategy, and a big discipline.

Without discipline to measure appropriately, management is just a word. Good managers know how to measure before managing.

Track your finances to find the leaks

Imagine being a student with no measure to check whether you are moving forward or backward.

Take a step back today. Track your finances so the information can guide you in managing your money moving forward.

Observation is the key to measurement; take note, reflect. Often easier said than done. Mostly, it’s harder since we are afraid of the reality that we are sinking.

Precision is important too. You can’t guess what your life costs. Real numbers, no estimations here.

My friend, you will encounter frequent surprises. After measuring, you’ll find holes in your watering can. Some of these holes are tiny and nearly impossible to see without a financial microscope 🔬. That microscope is your budget.

If we are to be successful managers of our wealth-building process, we had better master measuring. Otherwise, leaks in our watering cans will waste all our life energy.

Plug the holes, but before plugging them, you need to identify them by measuring the water in the can. Start today. List all your fixed expenses, variable expenses, savings, and investments, and track your money for the next 90 days. The results will transform your money management.