Next to our physical health most of us are primarily concerned with our financial health, and with good reason. Although our intentions are usually great our follow-through and discipline generally isn’t. Mere mention of
word budget or cutback sends us into fits.Healthy spending habits need not be synonymous with deprivation – a bad word in our “you deserve it/you’ve earned it culture.” Those interested in cultivating more healthy spending habits will be happy to know that rehabilitation is painless.
Step 1.
Start with a spending log. Yes, you have heard this advice before. This exercise is eye-opening if you do it diligently. If you have been unable to keep such a log because it is tedious or difficult to remember, consider using your debit card for every purchase. You can find Visa/Mastercard logo nearly everywhere you shop or buy, including many fast food spots. With online banking you will have access to a visual record of all your spending. This is a great way to begin to spot patterns and decide where you can cut back.
Step 2.
Analyze your online account statement (four weeks is ideal) to help you determine where your money is going. Most credit unions offer to minute transaction information. Review your log without judgment. What you have done, in terms of your spending, does not matter – at least not yet. What does matter is that you get a firm hold on your expenses. For example, how much money do you spend on coffee each week? Dry cleaning? Take out? Movies? You get idea.
Step 3.
Next, write down all sources of income. With a list of your income and expenses in hand determine your priorities. Begin your budgeting process here. Obviously housing and other fixed costs will figure prominently on your priority list. Now, take a look at conveniences that represent variable expenses. This is likely where you will find room to make changes. For example, if you subscribe to a video service can you get two DVD plan instead of three or eight DVD plan. If you buy coffee each day, can you bring it from home a time or two each week? Or would you be willing to purchase a smaller or otherwise less expensive cup? Can you clip coupons or eat out a little less?
