I believe that keeping a daily log of your purchases is the single most effective action you can take today to change your financial situation. Just knowing what it is that you are currently doing can help you be more intentional, and help you spend your money more effectively.
Also, you’ll spend less when you’re writing it down; it’s just how it works.
But a lot of you just aren’t going to do it. And I know that.
And I get it. It’s hard. It takes work (though not as much as you think it does).
But the biggest reason is that it’s scary. It’s uncomfortable. There are things in that list that you probably don’t want to see or acknowledge. I believe the main reason people don’t track their spending is because of shame.
Working through that shame is important, vital even, but probably something best done through an integrative financial coaching session.
I don’t want you to think that if you’re not willing to do this step, then you’re a lost cause. That’s not true at all. There’s lots that you can improve without taking that big of a step.
So here are a few smaller steps you can take to take control of your money, no expense tracking required. You can do any or all of these, and they don’t need to be in any order.
Table of Contents
End the month with the same amount of money as you started
Most people have a checking account. Let’s say at the beginning of the month, you have $987 dollars in it. (That’s a random number, so no judgment if you have more or less.)
Regardless of what you spend during the month, keep an eye on that balance throughout the month. Try to land your balance as close to that value at the end of the month.
If the balance is starting to get low, perhaps cut back on some spending, at least until the next month starts.
If the balance comes in high, you could take some of that excess money and throw it toward debt or into savings.
No need to worry about what you’re spending money on. Just try and get to an even cadence of money in your account.
Have more than $0 in your account
I’m not going back on my “no judgment” though above, but if the number you have at the beginning of the month and the end of the month is “$0”, then you might have a problem here. People with balances too low are more likely to be subject to fines and fees.
So instead, see if you can find any money from any other account you have, and put a little bit in there. Even if it’s $100, even temporarily. Start with a little bit of money, and work to end your month there as well. You will be in a much better place.
If you simply don’t have $100 to divert from anywhere else, and if you have $0 in your account, see if you can end a month with some amount greater than $0. Don’t worry if it’s $20. Just get something in there. And then then next month, so start with that.
Stop using credit cards
If you have any debt at all, and you’re still using credit cards, stop.
I love frequent flyer miles as much as you, but it’s still not a good idea. Interest rates are incredibly high (15-20%!) and you don’t want to risk paying that.
Even if you pay off your balance at the end of every month, you are vastly complicating your situation, and obscuring your understanding of your finances. Think about it: if you’re looking at your checking account to see how much money you have, how can you truly know if you’ve got pending and posted charges on a credit card that you haven’t paid off yet? You can’t.
Forgo the miles. Pay with your debit card if you can. If you pay your bills with a credit card, change them to a debit card.
Simplify. You’ll gain a greater awareness of your finances. And that’s what we’re going for here.
These are just a few ideas, and they may not even be the most important ones for you.
What is important is that you work toward understanding your situation, your habits, your preferences. From there, you can move toward intentionality, adjusting “what you’ve just always done” to “what you actually want to be doing“.
It’s hard, and it’s a long process, and you can start small. Just start somewhere.
What tactics do you use to gain better understanding about your finances?