With any budget, you have your categories that label what your spending your money on. Within those categories you’ll be able to see your areas of opportunity. I have an activity that I have all of my clients do at the very beginning of working together. This activity shows my clients how much they are spending just on their WANTS.
You need three months worth of bank statements. You will then highlight all of the “wants” you purchased. Add up all of those “wants.” The total is how much you spent on just things you WANT. This is to check in with yourself.
How much did you spend?
Does spending that money on random stuff you don’t really need make you feel a certain type of way? Would you rather spend it on something more responsible?
Are you in debt? Could you have paid off some debt with the amount you spent on “wants?”
Do you have short term or long term goals?
Do you have a retirement fund?
Do you like having “things” instead of going on trips for an experience seeing the world?
These questions are to help you see the difference between wants vs needs. Needs should be a priority and if they aren’t you need more discipline in your life. Money management is a mindset. If you are not in the proper money mindset, you can kiss all your extra money goodbye. Which ever type of person you are, whether you’re a money hoarder or an emotional spender, you need to have a balance with your finances. You can’t keep all the money in an account somewhere untouched and expect to have it grow or make you less stressed. You also can’t go around making it rain either. Balance, discipline, and consistency is key in financial wellness.
If you are in need of some financial advice check out my Taxes, Bookkeeping & Financial Wellness Facebook Group!