I don't need to write down plan, I have it in my head

This is what I hear very often from people who ask me about how to improve their financial condition. If I persuade them that a written financial statement and spending report is needed, usually they are surprised how much they throw away on things they don’t need. You should keep track of all your spending for at least a year to understand yourself better. This will help you, when planning your spending for next year, to be more realistic.

Budgeting and planning is crucial. Don’t just read about it, really do it. If you don’t track your spending and don’t plan your income, stop reading and do it now. It doesn’t have to be some highly sophisticated table. All you need is a sheet where you divide your spending into groups and enter each expense you incur. I believe that some people don’t do it because they fear the numbers will show how much they are wasting and they know they will feel bad when they see the truth.

Don’t be afraid of the truth. True information is your friend. More about financial reporting and planning in the chapter Accounting, numbers and analyzing assets.