Hi Chris,

> With the current financial debt cycle of
> most Americans (and I believe, Australians),
> by the age of 65, 95% of them will be broke,
> disabled, or dead.

Fortunately, it doesn't have to be that way....

One of the simplest answers to money-management is just keeping a budget.

I made my first personal budget about 4 years ago.... I made it because I couldn't figure out where my money was going! And after a few weeks, when I looked at the results, I was surprised!

What I did was every day I wrote down EVERYTHING I spent money on. That means food, drinks, bills, magazines, transport, everything....

During the day, whenever I bought something, I'd try to write it down. (If I was doing it now, I might record it on a small pocket-sized tape recorder instead, since it would probably be easier....)

Then, every night when I got home, I'd enter the results in my computer. I just put it down in a very simple Word document, just listing everything I bought....

I would sum up the amount I was spending each day. Then, at the end of the week, I'd sum up each day's tallies to get a final weekly figure for how much I was spending....

I'd also categorize my purchases. So food and drink would be categorized under "food." Books would be another category (I spend a ridiculous amount on books). Then there was transport, electricity, rent, etc.

After a few weeks, I had a look at my records. What I discovered shocked me! I had NO IDEA I was spending SO MUCH on both food and books! These were two huge items on my expense list!

I was eating out practically all the time, which can be expensive.... So the first thing I attacked was my food spending. I prepared more of my own food, and ate out less.... Since I was eating out so much, this made a significant difference in how much money I had.

I also reduced my book spending (but didn't cut it out entirely).... This also made a difference. I finally got my finances manageable again....

It pays to do this. If you've never done this before, you could be surprised where your money is going (like I was).... I honestly had no idea such a large chunk of my income was being spent on books and eating out!

Doing this will tell you exactly where your money is going. And it's only once you know what the problem is that you can start to tackle it....

Budgeting isn't usually a considered very "exciting" topic, but it can really be a life-saver.... :)

Some people have literally earned millions in income -- and a few years later, it's all gone. They've squandered it. You hear about this happening every now and then to actors, sports stars, etc. Where did their money go?

My bet is that these people NEVER made a budget. They probably have no idea where the money exactly went to. Now you know the effective technique which they didn't know.... Even if you only do it once, keep a budget! You'll learn a LOT about your own spending habits by doing it....

- Dien Rice