The Power of Tracking Your Spending: The Key to Unlocking Wealth (Ep. 110)
Unlock Your Wealth: The Power of Tracking Your Spending
Are you a law firm owner who's ever wondered where your money goes each month? You’re not alone. Many attorneys find themselves mystified by the disappearance of their hard-earned earnings. But what if I told you that tracking your spending could be the key to maximizing your wealth and achieving financial independence?
In today’s post, we'll explore why understanding your spending is crucial, how you can effectively track it, and the tools that make this process easier.
Why Tracking Your Spending Matters
One common problem many individuals face is underestimating their spending. Small expenses, like daily coffees or spontaneous online purchases, might seem insignificant but add up over time. So, why is this so critical to identify? Because what you don’t measure, you can’t control.
Tracking your spending allows you to gain awareness of your financial habits. This awareness isn't about feeling guilty over your expenditures—rather, it empowers you to make informed decisions about your finances. When you know exactly where your money is going, you can set intentional financial goals, identify unnecessary spending, and ultimately make better decisions.
Tools to Track Your Spending
Thanks to technology, tracking your finances has never been easier. Here are some popular tools that can help:
Monarch Money: This is the preferred tool among our clients at The Lawyer Millionaire. Monarch offers a simple, user-friendly interface. You can link your accounts, automatically categorize transactions, and set spending targets. It's designed to be collaborative, allowing both you and your spouse to manage and view finances seamlessly.
You Need a Budget (YNAB): Known for its practicality, YNAB helps you assign every dollar a job. It’s a great tool for people looking for a hands-on approach to budget management.
Quicken and Mint: Although Mint is being phased out, many have found both platforms useful for personal finance management. Quicken still offers extensive features for financial tracking and planning.
Actionable Steps to Start Tracking Your Spending
Choose a Tool: Pick a budgeting app that suits you. Most of these are available on your mobile device, making it convenient to track spending on the go.
Review Weekly: Dedicate a small amount of time each week to review your transactions. This habit will ensure that your tracking stays current and is manageable, preventing month-end surprises.
Set Targets: Rather than thinking strictly about budgets, set spending targets. This approach feels less restrictive and helps to focus your financial behavior.
Identify and Cut Waste: As you track your finances, look for unnecessary subscriptions or expenses. Redirecting this 'waste' towards savings or investments can significantly impact your financial health.
Redirect Savings: Whether paying off debt or investing for your future, decide where the money freed from cutbacks should be applied.
Finally, for those of you wondering if this applies to high earners—yes, it does. Even lawyers earning a million dollars annually can benefit from tracking their spending, ensuring they are optimizing every dollar.
Conclusion
Understanding your spending is a simple yet powerful step towards financial freedom. As you clarify your current financial situation, you're better positioned to take control and make proactive choices about your financial future.
Are you ready to take the first step? Try tracking your spending for the next 30 days and see how it transforms your financial habits. And, if you're looking for expert advice tailored to your unique financial situation as a law firm owner, consider booking a free consultation with us—the link is in the show notes.
Remember, knowledge is power, and tracking your spending is the foundation for smarter financial decisions.
Connect with Darren Wurz:
Transcript:
Darren Wurz [00:00:00]:
What if I told you that the single best financial move you can make doesn't require making more money investing in the stock market or even cutting back on lattes? Welcome to the Lawyer Millionaire podcast. I'm your host, Darren Wurz, financial planner for law firm owners. If you've ever felt like your money disappears every month and you're not sure where it goes, this episode is for you. By the way, have you felt that way? Today we're going to talk about why most people underestimate their spending. The best tools to track your finances, how one couple turned a financial mess into financial success. And how you can take control of your cash flow. Today.
Intro [00:00:41]:
We are on a mission to help lawyers and law firm owners maximize wealth and achieve financial independence. Welcome to the Lawyer Millionaire with Darren Wurz from Wurz Financial Services.
Darren Wurz [00:00:54]:
Hey law firm owners, are you ready to sharpen your financial mindset and take your practice to the next level? Join the Lawyer Millionaire Book Club, open only to lawyers, where we dive into powerful books that transform the way you think about money, business and success. It's not just about the books though. It's about connecting with a community of like minded attorneys. Sign up now using the link in the show notes. Alright. Hey, how you doing today? How's your spending, by the way? One of the first questions I ask clients and their intake is how much do you spend per month on average? And you know what? No one ever knows. And those who guess are often way off. Why is that? Why are they so off? Well, it's because small expenses add up fast.
Darren Wurz [00:01:43]:
A coffee here, a meal there, an Amazon order. Before you know it, thousands have disappeared. What you don't measure, you can't control. Is that familiar? What you measure gets improved. That's from business. That's from the business world. Let's take some business world principles and let's apply them to your life. You wouldn't just let your law firm spending run out of control, right? And no, it's not about depriving yourself.
Darren Wurz [00:02:09]:
It's just about being aware, having some awareness. And really that is the first step, some simple awareness. I'm curious about you though. Do you know, do you know how much you're at? If you were to guess just right now where your average monthly spend is, would you have any idea? I think even I would struggle and I do track it. I'd have to go look and I'm looking at everybody else's numbers. I gotta think about my own, right? Well, that's okay, but let me just encourage you Awareness is powerful and it's half the battle. Just having awareness, simply being aware about your spending creates better financial habits. Tracking isn't about guilt, it's about purpose.
Darren Wurz [00:02:52]:
When you know how much you've spent and you know how much you can spend, you're just going to make better decisions and you're going to feel better about it. Wouldn't you rather know what your spending is than get a. Get a bad surprise, right? Open up your bank statement and not bank. Who looks at bank statements anymore? Open up your bank app, you know, and see that you've, you've overdrawn your checking account. Wouldn't you rather know ahead of time, right? If you knew you were spending X amount on something, would you keep doing it? One of my law firm owner clients, we worked on budgeting together. We looked at his spending. We found that he was, between him and his spouse, they were spending $35,000 a year on Amazon. Now, you know, there might be a reason for a lot of those things.
Darren Wurz [00:03:46]:
You can get a lot of things on Amazon, right? You can get groceries, you can get a lot of stuff. But when you, one of the most powerful things that I think is to look at your spending over the course of a year and that does create some awareness, right? Because it's like, wow, I see how this adds up. And, and you know, a small little bit of discipline here and there can really make a big difference. Tracking your money also helps you in other ways. It helps you identify waste. You might be spending money on things you're not using anymore, maybe. How many apps have you signed up for? How many apps are you spending money on? How many things have you subscribed to, right? And you haven't realized it. Before you know it, you're spending a thousand dollars a month on Apple, right? No wonder Apple is a trillion dollar company because we're all, we have all these app subscriptions.
Darren Wurz [00:04:42]:
Tracking your money helps you identify the waste and then repurpose that money towards your goals and make financial decisions with intention. When you go through your expenses, you can look and you can see, you know, do I really need this thing that I'm spending money on? And by the way, there's no shame in taking something back because you're, because you made an impulse buy and you're like, well, I don't think I really need this. I think, I think I could be smarter. There's nothing wrong with that. I've done that plenty of times. So let's talk about some of the best tools for tracking your money. Okay. One of my favorite.
Darren Wurz [00:05:23]:
You know, technology is really the key, right? We love tech tools here at the Lawyer Millionaire. We help our clients get set up on tech tools. And technology is really the key. If you want to be really good at your money, technology is the key. There are lots of tech tools out there for personal finance. I know people who use Quicken and have had a good experience with that. There's one called you need a budget or ynab Y N A B. I used to use Mint back in the day.
Darren Wurz [00:05:58]:
Anybody remember Mint? And now it's see who bought them. Intuit bought them, and I think they're getting rid of it. It's part of Credit Karma's system now. And I think they're actually getting rid of Mint entirely, which I was really disappointed by because I used Mint. I used Mint since college. Oh, gosh, let's see. How long ago was that? Okay, see, I graduated college in 2010, so yeah, yeah, I used it for a long time. At least 10 years.
Darren Wurz [00:06:30]:
I used. I think I used Mint until they. Until they went. Got bought by Intuit. And I don't think they're around anymore. Maybe they are. I could be wrong. But anyway, my personal favorite and the one we use with our clients is Monarch Money.
Darren Wurz [00:06:47]:
And I'm not getting paid anything to make this recommendation, but I really like Monarch. We like it for our clients. I'll give you a big reason why. Because we can access it along with our clients. Clients can give us advisor access. And so we can get in there on our client's behalf and we can manage things. But what's really, really powerful also is that you and your spouse can each have. Have separate logins to the same program.
Darren Wurz [00:07:15]:
One of the most difficult things about finance and budgeting, it's fine when it's by yourself, right? And you're responsible, that's one thing. But when you have a partner and you got to deal with their spending, that's a whole nother ballpark. And you know what I'm talking about. If you're in a relationship, right, we're going to do a whole. I tell you what, we're going to do a whole podcast on money in relationships, because that's a whole thing, right? But that's really tricky, right? How do you communicate? Do you keep things separate? Do you combine things together? And I've seen every iteration of how to do this, and there's no one right way or wrong way. You just got to figure out what's the system that works best for you. But Monarch is powerful that way because it's very spouse friendly. So you each can have your own login to come in to the program, see the spending, et cetera.
Darren Wurz [00:08:15]:
Monarch's also really great because it's just a very simple interface, right? You go in, you can see your budgets, you can see your transactions, you can look at your overall spending, track your credit cards, your bank account statements, track your net worth over time. And it's just very user friendly. And that's what we love about it. Now, it's not free. I forget what it is. It's like $15 a month or something like that, but totally worth it. And I think that's the reason that they want that. They, they say at least that they charge a fee.
Darren Wurz [00:08:49]:
Unlike Mint, Mint was free, but Mint was selling your data to everybody. So, you know, so yeah, you know, it's smart to pay for something because then, you know, hopefully that's how they're driving the revenue and not through using your data. The way these apps work, if you're not familiar, you link your various accounts and it's a secure link. They don't have access to your bank account numbers or anything like that. It's, it's a data only link. It only imports your transaction data. You know, the actual, the spending and the dollar amounts. It brings all that information automatically into one place so that you can categorize your transactions.
Darren Wurz [00:09:33]:
And one of the things I really love about Monarch is that it automatically categorizes transactions for you and you can very easily set up rules so that certain things will automatically be categorized certain ways. And that is really, really helpful because it just gets your budgeting kind of just set on autopilot. Here's my pro tip for you. Oh, and by the way, there's an app for Monarch. So that, and there's an app for all these things. And that's really the best way to do this because then you have access to it on the go. It's right there. Okay, pro tip.
Darren Wurz [00:10:08]:
Spend 30 minutes a week. It doesn't even have to be 30. Spend 15 minutes a week reviewing your weekly spending. Okay? Now I know you haven't been doing this. I'm not asking you to sit down for hours and go back through the last six months of spending. It's unrealistic. But start today. From all the spending from this day forward that you're going to track, you can't do anything about the past.
Darren Wurz [00:10:37]:
Past is done. Whatever. Another thing, if you're a law firm owner and you're not tracking your spending you may be buying things on your personal cards and such. That could be business expenses that you could deduct and wasting. You're wasting money that way you're not getting the value of the tax deduction. So track your spending. How do I know? Because I've done this right? My Microsoft subscription was on one of my personal credit cards. Okay? That's a business expense.
Darren Wurz [00:11:04]:
Hello. Right. So review your spending now. Okay, I hear you. You make a million dollars a year. Do I really need to track my spending? Yes, absolutely. Does. Does the CEO of Apple not give a damn about how much Apple spends? No, they watch their spending.
Darren Wurz [00:11:32]:
Okay? Now if a billion dollar company need tracks its spending, you should be tracking your spending. Period. End of story. I don't care how much money you have. Now, at a certain point, sure, maybe you hire a family office and you have a CFO and an accountant and you offload something. A lot of this. And then they are tracking this for you. But everyone should be tracking their spending, period.
Darren Wurz [00:12:00]:
That's my take. That's my hot take. That's my controversial take. I don't care. You're making a million dollars a year budget. You still need a budget. Let me tell you a little case story or a case study. A little story of some individuals I worked with.
Darren Wurz [00:12:14]:
They didn't have very much money, but we were able to really make a huge difference. This is early in my career, right? Early. Early in my career I was a brand new financial advisor, totally green. I had this young couple I was working with. They were really struggling with credit card debt and overspending, right? They didn't have any money to invest with me. So what did I do? I said, let's take a look. Let's actually dig in. Let's look at your spending.
Darren Wurz [00:12:44]:
Let's look at where the money's going. Here's what we found. They were spending all this money on a horrible, horrible cash value life insurance policy that had been sold to them. Shame on the insurance salesman that sold them this policy under the guise that it was going to be this magical retirement college planning vehicle. Total bullshit. Okay? Pardon my french, but it is. And they were paying too much on their mortgage because their mortgage rate was higher. They had gotten their mortgage many years before.
Darren Wurz [00:13:19]:
Their rate on their mortgage was higher than prevailing interest rates at the time. So what did we do? Well, we swapped out that bad cash value and life insurance policy for term life insurance. So all of a sudden they had a whole lot more money in their budget. We, I encourage them to refinance Their mortgage. They did that. Lower their payments. They used some of that extra savings to pay off their credit card debt. Oh, my gosh.
Darren Wurz [00:13:42]:
And you can see how the avalanche just keeps going. So paid off the credit card debt, interest is gone. They're not paying so much money in interest each month. All of a sudden, they've got money in the budget to invest. Guess what? They started investing a couple hundred dollars a month. They had enough money to send their kids to college, Period. The takeaway? Most people already have the extra money to spend or to save. To save.
Darren Wurz [00:14:10]:
They just need to find it and to redirect it. Are you taking all the right steps? Is there hidden money? Is there hidden wealth in your budget that you're not taking advantage of? Take our Millionaire Money Mastery assessment. The link is in the show notes. Find out what you could be doing differently to optimize your finances. Okay. How to get started tracking your spending? Go find a tool and set it up. I like Monarch. There are many tools out there you can use.
Darren Wurz [00:14:44]:
Choose an app that you like. Connect your accounts, Review your transactions weekly, every week. If you do it monthly, you're not going to remember. You're going to be sitting there on March 30th thinking, what the heck did I spend 20 bucks on at Walmart on March 2nd? Gosh. Right, you're not going to remember. So do it weekly. Weekly means it's a small habit. Minimal time investment.
Darren Wurz [00:15:11]:
It's easy. Make it fun for yourself. I don't know, have a glass of wine or a cup of coffee. Whatever you're. Whatever floats your boat. Small habit, big impact. Number three. Set some spending targets for yourself.
Darren Wurz [00:15:25]:
Not budgets. We won't use the budget word since no one likes that. But set some targets right? You know what you what you would ideally like to keep the spending within and then look for leaks. Where are some things you can cut back? Where are some subscriptions that you don't need? Where. Where is money leaking out of your life? And redirect that savings to build wealth instead of just spending less. Decide where the money should go. Your debt payoff, your investments, your future financial goals. What's one thing you can do today? You can go find a budget app you like, download it, you can do it right now.
Darren Wurz [00:16:03]:
Download it on your phone and get started. And give yourself some time. Set a time. I like Saturday mornings. Saturday mornings work for me. I get up, I look at my Monarch, I review my transactions. Boom, Bada bing. Okay? If there's anything that's amiss, that's awry then I'm going to catch it.
Darren Wurz [00:16:21]:
If you don't look, you don't know. When you look, you find stuff. You'd be surprised. Okay, if you don't know where your money is going, how can you make the best decisions for your future? Tracking your spending isn't about restriction. It's about control and freedom. My challenge for you today is this. Track your spending for the next 30 days. For the next four weeks, once a week, track your weekly spending.
Darren Wurz [00:16:46]:
And by the way, this is something that we can help you with. Do you need help setting up a financial plan tailored for you? Let's chat. Schedule your free call with me using the calendar link in the show notes. And by the way, listeners to the show get $250 off their first month as members. If this episode helped you share it with a colleague who who needs some help, someone you know needs this episode, go ahead and share this episode with them. Well, that's a wrap for this episode of the Lawyer Millionaire podcast. Thank you so much for joining me today. I'm your host, Darren Wirtz.
Darren Wurz [00:17:23]:
See you next time.
Outro [00:17:28]:
Thank you for listening to the Lawyer Millionaire. Click the Follow button below to be notified. Notified when new episodes become available. This content has been made available for informational and educational purposes only. This content is not intended to represent investing or tax advice. Always seek the advice of a qualified investment or tax advisor with any questions you may have regarding your own financial circumstances.