Accountants the world over are dealing with this question from their clients on a regular basis.
Some of us ask this question every time we look in our purse/wallet or visit the ATM.
Businesses with huge revenues regularly go into liquidation. Businesses earning good money have low bank accounts, so where is the money?
Tanya Lacy from Intercept taught me years ago that Revenue is Vanity and Profit is Sanity.
Danielle Storey from Million Dollar Relationships continues to insist that people Know Your Numbers.
Jerry Maguire insists that you Show Me The Money.
Cash flow is king, so stay on top of it. I regularly (every couple of days) look at my bank accounts – personal and private. I don’t spend money if I can’t afford it. I pay off unsecured debt (credit cards) in full when it is due. I am on top of what money is coming in and going out.
Most importantly, I think long term and short term on my finance. Wifey and I have long term investments we can service now. My Bromance keeps telling me to spend money on landscaping, a deck, air-conditioning, a new Jag – all things I talk about wanting but I don’t need.
While I want them, they are really not essential and I can see that putting that money in my investments will give me a better lifestyle not that far down the track.
Oooo….. Delayed Gratification!!
What about you? Do you know your numbers? Do you measure Profit or only Revenue? How is your long term AND your short term financial health?