Get to Know Your Spending | Harris Casel Institute Melbourne FL
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Get to Know Your Spending

saving money, getting control of your financesIt can save you money in the short term—and the long run

January is a great time to take a good hard look at those finances and give yourself a leg up for the coming year. Rather than being daunted by the credit card bills that are rolling in, take steps toward taking control of your finances. With these starter tips, you can feel more confident in setting yourself up for financial success.

Where to begin?

It can be a little overwhelming, but as with any problem, first thing’s first: Break it down for yourself. You might think that you should open a savings account, create a budget, figure out how to pay off those credit cards, find a way to improve your credit score, and save for retirement. But hold on! That’s a lot to wrap your mind around, let alone make progress on.

There are a few things you can do to situate yourself in a more positive position this year financially. Remember—every step you take reflects your commitment to a better fiscal future! Start with one step. Here are some options.

Pay your savings account (like it’s a bill)

Set aside part of every pay check for your savings account If your bank won’t let you split a deposit between two accounts, then get in the habit of writing yourself a check each month (or with each deposit)—just like it was a bill you’d pay to anyone else. If the money is for your savings account, deposit it there on the same day every month, just like a bill that is due from a utility company.

When you do spend: Cash or debit?

Some people like to use their debit card for as many purchases as possible. One of the benefits of using your debit card is that debit cards make it easier to track spending. If you use an online app like Quicken you can tag each purchase with a category, once you have downloaded the transactions from your bank. Then all the categories are added up for you automatically, and it’s easy to see where your money’s been going these few past months.

One security note: If you use a debit card, be sure to use it as a credit transaction, such as VISA debit, if possible, rather than using your PIN for a debit transaction. This way your purchases automatically come with fraud protection.

Other people believe cash is the way to help them keep a handle on their spending. One strategy involves removing a certain amount of cash on the first of each month for each category (eating out, entertainment, clothes, etc.), putting it in an envelope, and spending over the course of the month only what’s in the envelope. When the cash runs out, so has your budget, until the first of the next month. This is also a good way to keep your receipts organized—just put them in each folder, and then you can easily see not just how much you spent but what you spent it on.

These tips will help you understand where you are spending your money. This is important, because it’s hard to adjust your budget if you don’t know where your baseline is. This makes it easier to create a realistic budget; a budget is useless if it bears little resemblance to your life as lived! For more ideas, see the article 12 Simple Money Saving Tips for Students.

By making changes like these, you will start to see the possibilities. Seeing yourself as a proactive decision maker about your finances can be empowering. It can help you to feel ready to take another step toward financial stability, whether it is next week or next month. Step by step you can get there!