In the old days, your parents might have extolled the virtues of “balancing your checkbook”. While this is technically still possible, this saying is dated, based on old-fashioned technologies and money-spending techniques. But the foundational idea is still relevant. It is important to know how much money you have coming in, how much you have spent, and how much you have left. Even in the days of simple balance checking on a bank app, lots of people only have a general notion about how much money they have at any given time. Ever experienced anxiety right before seeing how much money you have in your checking account? This is the result of not knowing what the reality of your financial situation actually is, while having good reason to fear the worst.
If you aren’t sure where all of your money is going, it’s time to take a close look at the activity in your checking accounts. Look over statements from the past several months, and take careful note of where you have spent your hard-earned dollars. If you are in a relationship in which you share finances, look over these statements with your partner or partners. Frank understanding of where money is going is important for good communication in these relationships.
If you’re having money trouble, there will almost always be some expenditures which surprise you. Depending on who you are, there are many categories of spending which frequently pop up, all of which are easy to engage is without realizing it. Here are a few examples to jog your memory.
- Unknown Payments. PPI, or Payment Protection Insurance, is an example of a legitimate product which was foisted on the consumer public through duplicitous means. People who signed up for large loan contracts often signed up for Payment Protection Insurance without realizing it, the terms buried within the dozens of pages of their loan contracts. These people only discovered the mistake months later after discovering they’d been losing hundreds of pounds each year.
- Forgotten Payments. Today, you can subscribe to anything. If you signed up for monthly deliveries of baby wipes or dog food or boutique TV entertainment, you may have forgotten about some of these payments, while the products keep streaming in. Take a peek at your spending statements, and see if there are any expenditures which you do not want, or need, to be making any more.
- Debt. If you are in debt, you are paying for the privilege. Everybody knows what interest is, or APR (which accounts for the fees as well as the interest). But when you think about interest as “the price you pay to be in debt”, the whole situation seems much more intolerable. If you are in debt, you have an expensive hobby, one which will only hurt you in the long run. Kill it off as fast as possible and start keeping the money you make.
There are endless other examples. In each other case, even those not covered, there are ways you spend money without really needing to. Cut out the excess spending, and you’ll change your life.