Take stock of your money

Over the years many of us have developed differing attitudes towards our money. These attitudes affect the way we view and treat our finances in our daily lives. Our education (or lack of it), preconceptions, differing environments and diverse upbringings have all influenced our behaviour towards money. Alvin Hall, Presenter of BBC TV’s ‘Your Money or Your Life’, emphasises that it is only when you have a clear understanding of your spending and saving habits or your ‘money personality’ that you can begin to manage your finances properly. This is an essential prerequisite to gaining a healthier financial life. In fact the value of knowing your financial self should never be ignored; if so, it will be at your own peril.

Assess your money habits

Have you ever come to the end of the week or month and asked yourself, “Hey? Where did all my money go?” Well that question’s not uncommon in this day and age. But the problem is evident when you don’t have an answer for that question – you scratch your head exclaiming ‘I couldn’t have spent all my money so quickly!’ But this lifestyle is not for you or me. In the next month or two you should be able to ask yourself that question and also accurately answer it knowing exactly where you’ve been spending your money. But the first thing you need to do is to take stock of your finances. You need to know where your income is going, how much you’re spending, how much you’re saving and whether you’re keeping in line with your budget (if you have one!). If keeping a log is not something that you normally do then I suggest that you buy a little notebook and for the next month begin to log every penny (or cent) that comes into your pocket and what you’re spending it on. If you have a computer then there’s a more excellent solution. Today there’s a myriad of personal finance software programs that can help you to keep your financial life in order. One such program I use is called ‘Microsoft Money’. It only costs around £30 and I believe it’s more than worth the investment. Once it’s installed on your computer, and you get familiar with its features, all that’s required from you is the discipline to log your spending on a daily basis. You can set it up to keep track of your income and outgoings for different current or saving accounts, credit cards and more. As you log your spending you can also allocate the category for which you’ve spent the money; i.e. transportation, eating out, shopping. You can even set up a budget to prevent you from overspending.

Discipline yourself to log and monitor your income and outcome

I cannot stress enough the importance of getting into the habit of logging and monitoring your spending habits. To see what’s happening to your money on a weekly or monthly basis might be one of the biggest revelations you ever get. When you’re able to see that maybe a large chunk of your income is being spent on your telephone bill, impulse buying (you know…those irresistible shoes!), or Chinese take–away from Cho’s restaurant, it is only then that we can you can say, ‘Ah-ha! There’s a habit I’ve formed and I need to do something about it.’ I have to be honest and say that at first this will be a painful process for many, but in the long run you gain a certain amount of peace when you can actually begin to account for your spending and saving habits.

If you want to improve your financial life then I’d encourage you to first embrace the significance of assessing your money habits. You won’t regret it.

God bless and protect
Chidi

www.thetotalman.com

Quote of the week:
“Never spend your money before you have earned it.” - Thomas Jefferson

 

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