Most of us suffer from a big bias called Mental Accounting. We think we can do complex calculations in our head, keep track of expenses, compare it with the past happenings – but hey this is not true.

So break up your expenses into the following BOXES.

A. Absolute essentials: Food, basic clothing, shelter, electricity, basic travel

B. Term, Health Insurance, Pension contribution.

C. Telephone, Internet, Doctor’s visit

D. Business expenses like job hunting, re-tooling, training.

E. Hobbies, Travel, Luxury wear clothes, vacation, hobbies

F. Luxury

Once you do this you realize that your EMERGENCY MONEY is ONLY for A, B and c. Never for D or greater…

Once you start keeping track of this, you know where your money is going – and whether it is within your budget. It also tells you whether it is in alignment of what you THOUGHT you were doing.

Now repeat for your Investments……

ONLY when you tabulate on a monthly basis you realize how much is going into ‘trivia’ – no point in THINKING you are in control of your finances.

I see this happening with my EATING – I go on a sugar free diet for 4 months – and then say ‘Will relax it for a marriage..’ or something like that..and find that for 1 full month I have not been able to stop that chocolate, bread, butter, sugar tea, ….

Instead of killing myself over it, I just need to come back on track….www.myfitnesspal.com helps…and then you realise how much damage was done. Of course you come back on track.

Similarly if you go off track, just come back on track instead of saying “I am useless’ -I can never stop, etc. etc…..

Just be there and like Nike says ‘Just do it’ ….