The Money Management Toolkit

When most people encounter financial problems, the first thing that usually goes through their head is they don't make enough money. And while it's true that higher earnings could temporarily help to relieve the strain of a stretched bank account — studies indicate the positive effects are generally short-lived.

A majority tend to fall into the same cycle after receiving a raise. Their expenses rise to match their earnings and they find themselves back at square one.

No matter how much money you make, effective money management skills are essential to enjoying a comfortable lifestyle with reduced stress and better health. As the saying goes, money can't buy you happiness, but good money management can help.

Tracking Expenses

If you want to stop the financial stress and rolling commentary playing over in your head, put your thoughts on paper. Identifying what your worries are and where hard-earned money goes can offer valuable perspective. Not to mention, with a greater sense of awareness will comes greater control and ownership over your finances.

There are several ways you can do this — including logging your spending in a notebook, keeping all your receipts, creating a spreadsheet or downloading an app on your phone. The how is less important than the what. Find a method that works best for you and that you can stick to for at least one month.

Weekly Review

Set aside one hour at the end of each week to review your transactions. Remember, you've already spent the money, so there is no value in beating yourself up about it. The review process is not a soapbox for your inner critic. It's an opportunity to learn more about your spending and how you can be more deliberate and efficient in the future.

Use this time to be curious and to learn more about yourself. Don't just look at the value of the transactions, search for the substance. Try to uncover patterns, identify habits and triggers for your spending. Get to the why beyond the what. If you don't like what you see, begin brainstorming strategies to disrupt your behaviour.

Adjusting as Required

Once you're aware of your spending habits, the next step is to change them. You've already considered different tactics you can use, now you get to put them into practice. Start small. Keep in mind that even tiny adjustments can add up to make a significant impact. For example, if you spend $4.50 on a premium latte every morning before work, you could save more than $1,100 in one year by taking advantage of the free coffee at the office instead. 

You don't have to do everything all at once, either. Each week or month, pick a new area of your transaction review that you want to work on. Worry about nothing other than that single line item. Mark out an area on the same log where you keep track your expenses and make a record of every time you didn't spend money on the area you're focusing on and then take the time to celebrate those wins.

Progress may feel slow at first, so it's important to be patient. But over time you'll feel the momentum building. Stay curious, try new things and have fun with your process. Though it may feel like a chore at first, once you begin seeing the results add up, you'll notice you begin looking forward to your weekly review.

Free Confidential Consultation

If you've tried several money management techniques but things don't seem to be improving, help is available. A Licensed Insolvency Trustee offers a Free Confidential Consultation and Life-Changing Debt Solutions that work. Call us today to learn how we can help you get the financial fresh start you need.