The Beginning Of Financial Transparency

How transparent are you with regards to finances?

It seems to be a growing trend, or at least to personal finance (pf) bloggers, to disclose their income and expenses. These pf bloggers are transparent and holding themselves accountable. They know that in order to obtain their financial goals, they have to get help from others.

I am not a pf blogger. You will not get tips on investments or frugality from me. However, because I am learning to be more transparent, I have decided to disclose my finances.

This is a scary thought. For years, my financial situation has been hidden from family and friends. As far as I know, only my wife knows of my financial burdens. Yet this is my first experiment in transparency and accountability.

Companies have been keeping financial records for years. It should be obvious that companies do this to show responsibility. Public businesses announce their financial results on a quarterly basis. This usually garners media buzz. Also allows them to manage their money better and hopefully make smarter decisions…

You should disclose your income/expenses

While not everybody may agree with this idea, I believe finances should be a major topic of discussion. Even if you do not have a blog, you should bring up finances with your spouse, partner, family members, friends, and/or anyone else you choose.

The #1 cause of divorce is finances.

By putting yourself out there, you allow everyone to benefit. Learning from the advice and experiences of others can be a wonderful opportunity. Everyone has made bad financial decisions, so don’t think you are alone.

Are you ashamed of how you have handled money in the past? That’s fine. Admit the mistake(s), share, learn from them and move on.

What You Should Be Doing

I mentioned earlier that companies disclose their accounting information. You should do the same. How detailed you want to be is your decision. While I am still deciding on how to pursue this, I will not be disclosing every single purchase.

This will be the start, or better yet, the elaboration of my financial records. Which might make you think, “Should I maintain financial history?” Yes.

I have always been told to keep tax returns for seven years. Whether or not this is accurate, I have done this ever since I started working. Some people and businesses may retain these documents longer. Seems like you do this to cover your butt.

Your tax documents are part of your financial records. However, there is one key item missing. Budgets. How many times do you create a monthly budget and then throw it away once the month is over?

Do you really care how your income/expenses compare to one year ago, or even ten years? You should. You may be shocked how your money was spent because of your lack of record-keeping.

The whole reason for having a budget is to keep you accountable. Helps you avoid making stupid impulse purchases.

Budgets help keep your finances in shape. Without one, you may likely spend lots of money on frivolous items, then find out you have no money to pay for bills.

Companies and governments have a budget. You need to follow their lead. Actually, you may not want to follow the lead of the government. This could lead you into deeper debt.

Unless you have outstanding financial records, you may not want to talk about how poorly your government manages money. You may find your foot in your mouth.

All change starts from within.

What Do You Think?

Should you disclose income/expenses? Dave Ramsey usually asks callers what their income is and how much debt they paid off. Even though it does not get much deeper than that, several pf bloggers have taken it to the next level.

Do you discuss your finances with others? Please share your thoughts below.

No related posts were found, so here's a consolation prize:
The Beginning Of Financial Transparency.