The Success Cycle (Financial Success with Personal Budgeting)

STEP 1: Create a Plan
Without a plan, you will find it difficult, if not impossible, to find your way through the maze of personal financial complexity. Few of us would consider taking a trip to a new location without first consulting a map and planning the best travel route. So it is with financial fitness. After you have created a net-worth statement, you need to determine the direction you will take next. This includes carefully planning the way you will spend your money on a monthly basis. Planning is a process that successful companies follow meticulously. Often these plans include detailed monthly, quarterly, and annual information regarding sales, expenses, profit, and cash management.

Your monthly personal financial plan should include both a summary of the income you expect to receive during the month, and a detailed plan for spending during that month. As with all types of planning, until you have reduced the plan to writing either on paper or on the computer, it is not really a plan, only a wish. The Money for Life Success Planner teaches you how to create an effective monthly plan.

STEP 2: Track Every Transaction
Once you have completed a monthly plan, you need to begin tracking your progress. Companies in America spend billions annually tracking every transaction, including sales, expenses, and cash receipts. Imagine trying to successfully manage a company without using and applying basic accounting principles. Some try, but largely they either fail or have low levels of success. This should not be surprising. Why then do so many try to achieve personal financial success without tracking their income and expenses?

Companies don't choose which transactions to track-they track every transaction. The only way to get complete value from tracking is to track every transaction. If you want to become financially fit, you must be prepared to carefully follow this principle. Tracking every transaction can seem overwhelming at first, but with the right tools, this can be very simple. In this book you will learn about some of these tools and how to utilize them successfully.

STEP 3: Compare Your Actual Performance with Your Plan
A written plan does little good if you don't take the next step of comparing your actual results against your plan. Again, well-managed companies utilize the comparison process on an ongoing basis. Budgetary managers in these companies receive monthly, quarterly, and annual comparison reports, which highlight the areas for review.

With physical fitness, a coach tests your performance at regular intervals and compares the new information with past results. This allows you and your coach to understand the areas in which you have improved and those areas that may require some changes.

It is the same with financial fitness. The step of comparing your actual results with your plan is a crucial one. It includes looking at both income and expenses. Planning and tracking do you very little good if you are unwilling to take time to compare your results on at least a monthly basis. As you make this comparison, you will immediately understand how and where to make necessary adjustments.

STEP 4: Make Adjustments
It is nearly impossible to create a perfect plan the first time around. Great planning is a process that includes both time and experience. As you plan, track, and compare, you are able to see clearly which areas need adjusting. These adjustments may include adding spending in some areas and reducing it in others. The entire process does you little good if, at the end of your review, you are unwilling to make necessary adjustments.

Good managers use the information provided from variance reports to make appropriate adjustments. Adjustments include changes that have an impact on both sales and expenses, ultimately enhancing the overall profitability of the enterprise. Each time you complete the cycle by making necessary adjustments, your plan becomes more accurate. You will be surprised and amazed at the adjustments you can make over time.

Following the Success Cycle allows you to incorporate processes followed by successful companies and project managers. What's more, the Success Cycle can be used to help you successfully achieve a number of personal goals and objectives. Other areas in which the Success Cycle could be used include physical fitness, weight loss, personal development, and educational achievement.

This article is provided with permission from Dearborn Trade Publishing and is taken from the book Money for Life Success Planner. Learn about the Money for Life Success Planner, by visiting www.mvelopes.com