How awareness can help your financial situation

There’s the old adage that if you don’t measure it, you don’t know if you’ve made progress.

That statement holds true in a number of areas – personal finance being one of them.

Being in denial of how you are spending your money has gotten you into a place where you are now looking for help to get out. You can tell yourself that you aren’t spending that much, but in reality if you aren’t tracking your costs you aren’t really going to know where your hard earned money is going.

Awareness of what you are spending your money on and being intentional about it will help save you money. 

Getting started

The very first place to start is being aware of your spending. Chances are good that if you keep track of your spending and really think about it before you buy something you will spend less.

Get started now. Don’t worry about starting at the beginning of a new month or new week.

For a month, track your spending. Use a spreadsheet or a journal and record each and every purchase. Record the amount, the date and give it a category. You can be general with the categories.

Example categories:

• Groceries

• Eating out

• Subscriptions

• Entertainment (including streaming services)

• Cell phone

• Utilities (including internet)

• Housing

  • Rent/Mortgage

  • Insurance (house or tenant)

• Transportation

  • Car payment

  • Insurance payment

  • Gas

  • Transit pass

  • Parking

At the end of the month, review what you’ve spent and analyze the numbers. Are you spending more than you thought? Less? Did any of the purchases surprise you?

Do the same thing next month. 

After that month is over, compare your results. Did your spending change?

Continue to repeat the process.

Be consistent

Now that you are tracking your spending and are aware of your purchases. Be consistent and do it daily. Check your bank accounts and credit card transactions every day. Make sure to record any transactions as they happen. Either do it the day you made the purchase or the day you see it on your statements.

This practice will help keep your spending top of mind. 

Another added bonus is that if there is any fraud hitting your account you will see it right away and can contact the bank.

The next step

Now that you are recording your spending and being more aware of how you spend your money you may notice that you have a little more money at the end of each month. You can use that extra money to pay down your debt.

The next step is to gather all of your account balances – your bank account and credit cards. Don’t worry about your mortgage balance. You can deal with that in the future after you’ve paid down all of your consumer debt.

Record all of your balances. Be honest. The number might be scary or it might be a lot better than you thought it would be. 

Keep track of the payments you make and update the balances as you do. By doing this, you’ll see how your debt is starting to decline and it will give you motivation to keep going.

Make sure you make the minimum payments on all your credit cards. 

Wrapping up

Being aware of your spending doesn’t have to be a scary thing.

It can be daunting because it is unknown. Even if it is a bigger number than you thought, know that you can deal with it. It will take time, but if you are aware of your spending you will likely have more money at the end of the month than you did before and you can start paying down your debt.

I believe in you!