This week in my FPU class we discussed the various ways we’re marketed to in Buyer Beware! This is one of those classes I enjoy teaching as we discuss and begin to notice the most subtle of them. How many times does the favorite installed coffee app remind you about Happy Hour this afternoon with discounted or buy 1 / get 1 free? Or you’re at your favorite department store and the sales person says, “would you like to save 10% today by applying for “insert store name” credit card? This one can be tricky and most of the time I simply say no thank you. However, there was one that kept it going with me. Talked about how they basically paid me to shop by using their card and why wouldn’t I want to save 10%? LOL….let’s say I stood my ground and gave her my business card.
We’re marketed to in ways many people don’t even realize and wonder where those holes are in the spending. Using a debit or credit card physically and emotionally removes you from real money in ways it doesn’t even feel like you are spending. It’s easy to spend with just a swipe. Try 1 simple trick this week. The next time you stop for coffee, run in the grocery store or a burger after work try paying for it using cash. You notice your spending your hard earned money faster!
If you want to find the leak in your budget, take these steps. You might be surprised at what you find. This is one my first steps with clients in order to begin creating the monthly spending plan.
Step 1: Take Inventory of Your Spending
Look at your checking account and pull up 30 days’ worth of spending. It doesn’t matter what 30 days, just as long as they are consecutive. Every time money came out of your account during that time frame, categorize it by writing it down in a category. Some common categories are food, entertainment, gas, utilities, and rent or house payment. Make any category that fits your spending habits.
Next, add up all your separate categories. Is there one that surprised or shocked you? “WHOA! I had no idea I spent that much on “fill in the blank”! Pay special attention to your Amazon charges, this is one I have to watch the closest, especially now. That is the money leak.
Step 2: Reflect on Your Goals
From an initial consultation all the way throughout my monthly sessions we write down your short and long term goals. Ask yourself, “Does this spending move me towards my financial goals?” If not, you just discovered the money leak you should cut out or reduce in order to save more. It always sounds easier than we think. But like any new habit it takes times to develop so start with 1 category item. Several years ago I would stop for a Grande Skinny Vanilla Latte, it was only $3.25. Remember, I said SEVERAL years ago! I worked hard and I deserved it, right? Except it turned into an expensive habit which meant I was spending on average $75 a month. Whoa!! At the time I decided to learn to make them at home, purchased my cute travel mug and save the monthly expense. Now you have money to put towards your emergency fund or financial goals. You also still have the caffeine you need to get your day started.
Step 3: Remember to Enjoy Life
It’s important to remember if it is something you really want, it’s okay to have it! Make sure you are purchasing it in a manner that is reasonable and doesn’t damage your long-term goals. Do not allow the debt and wasted money on interest follow you into the future and derail your dreams. Remember our conversation about sinking funds a couple of weeks ago? For long term goals establish your savings account and budget to save for the vacation, new home, or holiday gifts.
Anyone need a great Latte recipe? Enjoy your week and thank you for following my weekly blog.