Do the same exercise at the end of the next month. And every month after that, putting each month’s numbers in a column to the right of the previous month’s numbers.
If the net result is increasing, you are doing something right. You are on your way to building wealth.
If the net result decreases every month, you will have identified a problem that needs to be addressed. Go back to your budget. What went wrong? Was your income lower than expected? Or – more likely – did your expenses exceed your budget?
Ask yourself why it happened. Was it a once-off cost that affected one month in isolation? These things happen. Try not to have too many of them, but don’t lose sleep over it.
Or was it a new monthly expense that you hadn’t anticipated? Can it be reduced? If so, reduce it.
If not, update your budget. You might have to cut somewhere else to get yourself back on track. Hard choices. But necessary.
After implementing these changes, track the numbers again at the end of the next month. Were your adjustments successful in correcting the downward trend? Did your net wealth increase over the last month?
If so, carry on.
If not, repeat the steps listed above.
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