Financial Transparency

I was trying to think of a catchy title for this article but thought that the title "If you don't pay attention to your money it could lead to embezzlement, various forms of addiction (gambling and drugs for example), and affairs" seemed a bit long and off-putting. It is however, the truth. As I have seen a few times with businesses and more than enough times in families, when there is only one person watching the money, there is a lot more temptation to do stuff with the money that you shouldn't do. These are the things you should do with your money, whether it is money in your business or money in your home (obviously if you are single and have no one to answer to this may not be as applicable):

• You should have a written budget at the beginning of each month which lists what money is coming in and where it is going. When everyone knows how much is coming in and how much is going out (as well as where the money is going to) there is less of a chance that the money could be diverted and used for illicit purposes (ie: used to fund a shopping or drug addiction).
• There should be a clear separation of powers when it comes to your money, meaning that one person is not in charge of everything when it comes to banking, writing checks, paying the bills, etc. Although I would like to give you the gristly details of a business that is still under investigation for financial mismanagement, I can't. Suffice it to say that one person was in charge of the money for years and no one else in the business knows exactly where the money went because there was only one set of eyes on the entire financial process...it will probably turn out to be a lengthy and litigious situation.
• Everyone who has access to the money should account for both income and expenses in writing and this tally should be balanced against the bank statement each month. Unfortunately, this is how my friend found out that her husband was having an affair. He would take money out of their account, not write down what it was used for, put money back into the account to cover the purchases, and he never thought that she would know that he had bought various things for his new girlfriend because they weren't in the habit of balancing their bank registers against their bank statements and she rarely even saw a bank statement come in. Until one day she did look at the statement and that was pretty much the end of their marriage.
• Each person should have a small "slush fund" of sorts. In business, of course, you want clear accounting and receipts for everything, however money represents power in a relationship and each person in the family should have a small (notice I didn't say large) amount of money that they can use as they please and not have to account to anyone for it.

The bottom line rule is that there should be no lying and complete financial transparency with your money. If you or your spouse or your employee needs to lie about money then there is a big problem. It might be a communications problem (like I said before, a power "you can't tell me what to do" issue) or it could signify something bigger (like hiding money to use for a gambling problem).