Smart Money Habits – The Next Step

In my last post, I talked about how to organize your personal finances. Today I’m going to discuss smart money habits. Or, in other words, the next step after you’ve made a good estimate of where your money goes and what areas you spend the most in.

Smart money habits take time to form. It all begins with a pen and a notebook that you carry with you at all times. For the next month, I want you to write down every individual amount you spend – be small or large. Your notebook doesn’t have to be large, actually – the smaller the better since you want to get in the habit of taking it with you everywhere. The key here is to write down your expenses as they occur.

Don’t worry, you won’t have to do this forever, this exercise is merely a way to help you form smart money habits. Once the month is over you can dispense with your notepad or continue using it for a few more months – the choice is yours. The objective here is to get a real picture of where your money goes.

In my last post, I asked you to estimate how much you spent in your main and sub-categories this time you’re recording the facts as you go. This will show you all the hidden money drains that have become a habit. For some of us, there may be things we purchase on a regular basis we didn’t even factor into to our category estimates. Often we spend money without thinking about it.

This notebook exercise is the best way to tell if your estimate was close or way off base. Many of us are surprised at how much we actually spend a month on food, gas and miscellaneous purchases.

I hope you find the above a good exercise. Smart money habits are based on knowledge and as we know, knowledge is power. You can’t make a change for the better unless you have all the facts.