You know where your money goes each month, right? Surprisingly that is not the case for most of us. Here’s how to determine where your money is really going.
It’s Time To Start Balancing Your Account
Back in the days when we paid with checks most of us had to balance our checkbook as some checks would take a while to clear. As convenient as mobile payment options and debit cards may be most of us live more by the balance we have remaining than we do by a budget—meaning it’s time to start balancing your account again.
Utilize Your Banking Tools
Almost every bank’s online system has built-in tools to help you balance, organize and manage your money. At the very least, you want to start looking at your accounts (including your credit cards) and really taking a look at how, where, and when your money is being spent. Most of us have at least a few shocking revelations. For example, your twice daily $4 coffee adds up to almost $3,000 per year.
Create A Budget
If you don’t yet have a budget it’s time to create one. This budget should include a strategy for paying off debt and putting some money in the bank. Suzy Orman suggests always paying more than the minimum balance each month and that most will benefit from paying off the highest interest (not the highest balance) credit card first. Once cards are paid off, don’t cancel them, as open cards with zero balance are good for your debt-to-credit-ratio. Once debt is paid off she suggests saving at least an 8-month emergency fund.
Even if you have minimal debt and money in the bank you may be surprised to find the thoughtless ways in which you spend.