How are you spending?

This is the fourth article in the My Second Million series.

 So, how are you spending your money? Where are you spending your money? And finally – how much are you spending? This is the next step after you take your net worth snapshot. You know where you are, now its time to seek direction.

 Money slips out of our hands so easily: a dollar in the vending machine; a cappuccino on the way to work; the $6 value meal; and pizza night or two or three. Sometimes we don’t realize where the money goes.

This exercise is to show you how you are spending your money. How you track this is up to you. You can carry a small notebook and record every transaction like a check register. You can simply note the category and the amount. You can track it in a hand held computer, or even use an online service. The important thing is that you track every spending transaction for 30 days and I mean every transaction. Yep, even that 75 cent bag of chips from the vending machine.

 Fast forward; 30 days have gone by and you have your notations. Now we find out where you spent your money and how much. How much did you spend on vending machine snacks? How many times did you eat out? How much did you spend of lunches? How much did you spend on gas? Did any of this surprise you? I bed it did. Isn’t it surprising how quickly these expenditures add up? A ten here, a twenty there, a dollar over there, soon it adds up to hundreds of dollars.

OK, now that you know where you are spending your money, you can now change how you spend your money. Don’t put yourself on austerity budget right away. You will end up feeling deprived and go on a spending binge. Kinda sounds like dieting doesn’t it. In a way it is like dieting. Dieting is usually not successful unless you change the way you eat as a life change. Financial fitness requires the same kind of commitment. You want the changes to last for a lifetime. So change incrementally and develop new spending habits, positive habits that will grow your net worth and give you financial freedom.

 Look for simple ways to cut back expenses, such as: bag lunches, ride sharing, reduce energy usage, seek lower interest transfers of credit debt, combining errands to save gas, buy non-perishables in bulk, seek value as well as price, etc.

Knowing these things gives you control. This gives you power. Now you know where and how you spend your money. How you continue to choose to spend your money is up to you. You might even ask yourself why you spend money in a certain way. Is t to impress your coworkers? Are you buying friendship? If so, then understand that these are false relationship builders. Do you buy comfort foods? I do, but I also look for other ways to relax. You can too.

 Where are you financially? How are you spending? These questions are the beginning of your financial fitness journey. Your answers will determine your success.

I wish you much love and abundance. Take care, stay well and be safe.


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