I’ve been gone for a while now I’m back with the jump off.
Ok, not really the jump off but I’m back with another quick finance tip! My goal with this blog is to give the everyday person, regardless of your financial background, income or socioeconomic status, some useable tips to set yourself up for a better financial future.
This blog series will be an extension of my ‘Mo’ Money, Mo’ Problems’ blog, where I will do deeper dives into the 5 tips over the next few blogs posts and I’m giving you exercises to put into practice that are applicable for everyone.
First tip, using a tool to help track spending. This is really a trick that I think all levels of financially savvy persons should use but especially individuals new to budgeting. Mint is one of my go to tool because it’s free, it provides a graphical representation of your spending and it’s easy to use. The first step to understanding how to budget your finances is to learn your current habits. With learning about your habits, you can learn how to improve or change these habits for the better.
Here is the challenge I give to you. Set your Mint account up and spend in your usual way. Continue to pay your bills the same way you have done, use credit cards, etc. and do not look at your Mint account for an entire month. I know what you are thinking, ‘that defeats the purpose of having Mint in the first place’ but hear me out.
This is an exercise to help you understand what areas you spend the most amount of money in and it will show you what your habits are up front. One of my financial vices is eating out. I will spend an obscene amount of money at a few restaurants in a week, if I enjoy the food. That is a budget destroyer, but, I understand this about myself.
I have created an ‘eating out’ budget just so I’m not depriving myself but I’m also not breaking banks to eat out. The goal of this exercise is, after that month take a look at what you spend the most amount of money on. Is it bills, eating out, your favorite clothing store?Where is your money going?
The next question to ask yourself is, where can I scale back? Do I really need to spend $30 a day on food every day? If you don’t want to stop spending cold turkey, you can set budgets for yourself on spending categories such as, food, transportation, utilities etc. within Mint. You can also track your spending toward those smaller budgets in each category.
Test yourself and try sticking to your new budget on Mint for a month and see how much money you have left over or you have spent over your budget. This is tip number two on my previous blog, ‘Create a living breathing budget’.
Again, this is a learning exercise to understand your own spending habits. We all have areas to address in our finances and there are always opportunities to learn how ‘adult’ financially.