Awareness: The Key to Improving Your Finances
Building personal finance skills is not an overnight change. It requires practice and discipline just like learning piano or playing tennis. However, it all starts with the desire to change and this is the most important part in my opinion. If you take a step back and look at your current life as a whole and you aren't happy with what you see, then that is the spark we need to light the fire to fuel your motivation. I can speak from experience: there are some things in my life that I really want to change, but I know these changes won't come over night so I work towards them little by little. There are also things in my life that I am very happy with and I only have these things because I made the decision in the past to start working towards them.
Whenever I start helping someone with their finances I always give them the same first task. If you want to get started I would advise you to do the same thing. Get yourself a little notebook and a pen and every time you spend money I want you to make a record of it in the notebook. Note the date, the amount, what it was for, and any other details you think are important. Create a system that works for you so you remember to do it, I started out by putting all the receipts from the day in my pocket and I wrote them all down when I got home.
I think it's best to do this for a month but two weeks would also work. You want to do it for long enough to get an idea of your spending habits, especially if you have a regular paycheck and regular bills. If you stick with it for a month you will have a good idea of your spending habits. Sit down and take a look over all of the records and look for trends or surprises. Do you spend more than you thought on fast food? How about weekend shopping? From this month we can start to identify areas where we could be a little more frugal. Another good benefit of doing this is that after a month you will have much greater awareness of how you spend money. This is key. Once you start paying attention to your spending you start to understand what managing your finances really feels like. You start to understand the culture we live in and how you are bombarded with consumerism everywhere you look. This is what we are up against.
Anyway, if you made it this far then I'm happy for you. I hope you found it valuable and I would encourage you to continue recording your expenses. The tools I use may have changed over the years but I still sit down every night and do a quick look over my finances to make sure everything looks good. Now that you have established an awareness of your spending and you are recording your expenses we can start to develop a budget. I'll go over the basics of budgeting in another post but for now celebrate your accomplishment. You are going in the right direction.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.