Some people advocate creating a budget and remain within that spending throughout the day, week, or month. For instance, many people budget a certain amount for food or coffee per week. Instead, I will present a very straightforward and insightful method that will guarantee you will maximize your understanding of how to shake that bad spending habit.
People are heavily in debt. Student debt. Mortgages. Line of credit. Credit card. You know exactly what I mean. In general, people just don’t know how to manage their money. They were never taught how to handle their money wisely and so it can leave as easy as it came in.
You can handle your spending management on your own. You don’t need a counselor. You don’t need someone holding onto your credit card. Let’s break down exactly how to do this.
First order of business is to get a small notepad or have a smartphone with a note or special app to input your expenses. First thing is to write down what you believe you spend in a given day, week, and month. Write all of those out before you begin the next step.
The overall process is simple but powerful. As you go about your day, write down EXACTLY every single thing you spend your money on. I’m talking specifically down to the penny. Every time you buy a cup of coffee, every visit to the vending machine, everything, you must write it all down. I must make this point clear that you must do so right at the moment you’re going to spend it. The purpose of this is to force you to know that this is another entry in your expense sheet. You know that you shouldn’t buy that afternoon latte, but normally, you would just tap your card and you don’t really see the expenditure. Writing it down at that moment forces you to pull out your notebook/or note in your smartphone, write in the entry, and see exactly what you’re about to spend and how much you have already spent throughout the day. Don’t say “I’ll fill it in when I get back to my work.” You must do it at that moment for this to have maximum impact. You may actually be discouraged in purchasing the item simply because you’ll think of the hassle to take out the notebook and put the entry in there.
When bills are being paid, write down each and every single one of those as well. Note the price you pay for each of these. Cell phone, internet, etc. Are you able to get these for any cheaper? Maybe you’re going over on your data every single month, resulting in overage charges. Or perhaps you don’t use enough and are paying too much for something you don’t use. Call your providers and ask for something that fits you better and ask for a promotion. Seek an alternate provider and get a quote. Compare them with your existing provider. Go with the one which best suits you.
This method of writing down exactly what you spend will actually allow you to see all of the other bad habits you have as well. Maybe you didn’t even realize it but you bought 12 bags of chips and 7 cans of coke this month in the afternoon at work.
This will give you insight into where the money is being spent and perhaps find an alternative or simply exclude them. If you’re spending $40 on coffee per week, bringing your morning cup from home on the way into work may save you a considerable amount of the year. Same with lunch. Then with those savings, you can use that money to invest in an asset, instead of consumables.
I challenge you to do this for 30 days. If you can successfully do this, I know you’ll make a huge difference in your life not just for the economic benefits but also for lifestyle habits too.
