At Liquid we're all about simplifying money. One of our cornerstone philosophies is creating a movement so people get in touch with their money. Literally. While there are useful tools available that will create a budget for you, the process is a lot like a black box, meaning you give the tool your data and it "magically" creates a budget for you and you really don't know how it did it.
Perhaps you're thinking, "I really don't care how it did it." That's the problem: you're not involved in the process. Weight Watchers is one of the most successful programs, if not THE most successful for losing weight. Why do you suppose that is? Is it because the food they make you eat is fabulous? Is it because they'll come and burn your house down if you don't follow the plan? Is it because they only cater to people who are only five pounds overweight?
It's because those who are successful at it are involved in the collecting and processing of their own data! Wow! What a concept! We actually have to be involved for something to work.
I challenge the participants in my workshops to take a pad around with them for two weeks and write down EVERYTHING they spend their money on. I don't care if it's 99 cents for a package of gum or $2,000 for something extravagant. Okay, so you might look like a nerd for a couple of weeks, but hang with me here. The next thing you do is take the list and multiply everything by 26. Why? Because two weeks times 26 equals 52 weeks, or an entire year. I was giving a workshop in San Jose, California and a woman exclaimed that she spends $804 a year at Starbucks!
The process serves two purposes (understanding the purpose helps make things work): the first is that you see exactly how much you're spending on day-to-day stuff. Most people don't realize where their money goes, (oh, if only I had a dollar for every client that told me that!) and by writing it down, you now see where it goes. By doing the math, you see how much you're spending on each expenditure for an entire year. The second purpose is that it forms the basis of your budget. You're probably already aware of how much you spend on the big stuff, such as your home and car.
Getting in touch with your money simplifies money by making you more aware of what's going on with your money and taking more uncertainty out of the equation.