Every day, I hear more and more people talking about how expensive everything is these days. Even people who never paid attention before, are paying attention now. So what do you do when your spending is out of control, and the cost of everything seems to be skyrocketing? Here are a few tips to help you get back on track and start 2024 with a plan.
Pay Attention
Pay attention to where your money is going. As long as you have money in the bank at the end of the month, you’re good, right? Wrong. And if you don’t have money left over at the end of the month, this step is even more critical. Take at least a 30-day snapshot of your spending and track it. Track every transaction from every mode – cash, check, credit card, debit card, etc. In this age of electronic banking, this step is fairly easy. You should be able to download your transactions into a CSV or Excel format. Once you have all your transactions listed, categorize them. The goal is to see how much you spent on each category in the past 30 days. Groceries, restaurants, utilities, clothing, mortgage, gas, insurance, and debt payments, just to name a few. Create the categories that are meaningful to you.
Make Some Decisions
Now that you have the data that shows where your money is going, do you like the answer? Are you shocked that you’re spending $1,000 on eating out at restaurants and fast food each month? Now is the time to decide what your spending priorities are. And only you can determine them. If restaurant dining is your favorite thing to do, and it’s your family time or date night, then maybe it’s a priority for you. For others, maybe sporting events or traveling is more important to them. What if you would like to save money for your next vacation? Would you rather go clothes shopping at the mall, or set aside that money in your vacation fund? You get the picture. You are in charge of where your money goes, not the other way around.
Do the Math
If you’re short every month, you have two choices. It’s math. If you don’t have enough money to pay your expenses each month, you need to either 1) take a hard look at your spending to see what items can be cut (or cut back), or 2) figure out ways to increase your income. Putting those overflow expenses on a credit card is not the way out. It just digs a bigger hole to the tune of 20%+ interest rates. Instead, focus on cutting expenses, increasing income (side hustle anyone?), and paying down that debt.
If you need help getting your finances on the right track, I’m here to help. I’m here to tell you that it is possible to get control of your spending and live the life that you want to live.
You’ve got this.
