Are you sabotaging your efforts?


You may have decided that you are going to get your financial house in order this year. That may have included starting to budget or plan for your spending. If so congratulate yourself, that is a huge step in the right direction. As you probably know the next step is to track your spending to make sure you are sticking to the plan.


There is a crucial step though that is often missing in this process.


It involves changing your money mindset.


Most of us spend money when we feel we want or need something and then track it. Then at the end of the month we check our spending plans to see how we did.  We might even look mid-month and make adjustments. The problem is that we are making these changes after we have already spent the money.


If you do this, you are sabotaging all of your efforts 

The mindset change that we need to employ is to understand that once we have set up our spending targets for the month we need to stick to those targets if possible. That requires checking to see if you have money left in your spending categories before you make a purchase and only making a purchase if there is money to spend. So many of my clients have trouble with this part of the process and early on it was a huge challenge for me. I rebelled against holding myself accountable. Because of this it took me years to stop overspending.


One way to make this easier is for the categories that tend to be trouble makers like groceries, eating out, clothing and entertainment, try dividing your monthly spending targets into the number of weeks in that month. Then allow yourself to only spend that amount of money that week. For groceries and eating out you can also put cash into an envelope for the week and when the money is gone you will know you can’t spend any more. The money is gone. There is no more to spend. Breaking it by the week helps you stay on track. Otherwise, that one week of spending 30% more for groceries can throw your whole month out of whack.


I understand that this is a challenging idea. Almost none of us have ever required this of ourselves or were taught to manage our money in this way. We want the freedom to buy when we see things that we want. This way of thinking, allowing ourselves to buy when we should be putting these purchases on hold is however the number one reason we fail. Spending more money than you have leads to debt since you are using money you need for other necessary expenses. When those necessary expenses arise, you wind up putting those on credit or not having the money to pay the bill and then incurring late fees and points against you on your credit score.


Let’s change this now.


Make a commitment to check first before you spend.


This one step will allow you to have the money for everything you planned and keep you from getting into trouble.


If you need help with setting up a budget, learning how to track or sticking to your plan please get in touch. If you can create these financial habits now you will have more money available for the rest of your life. My clients report that investing in Money Coaching is the best money they ever spent.