Where to start if you want to do better with money

By Sue Holm, JD, CFRC

"Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now."
Johann von Goethe

If you have decided to secure your financial future, you are probably planning to take one or more of the following actions:

• Save more
• Pay off your debt
• Invest for the future

 You may wonder, “Where should I start?”

The foundational step for each of the above actions is a probably the best –kept secret of financial management.  Here’s the secret:  TRACK YOUR MONEY. 

Yes, before you can commit to saving more you have to know where you money is currently going, so you can decide how much money you can regularly save.  Before you can commit to paying off your debt, you need to know how much money you can pay to your creditors.  Investing in the future is futile if your past keeps sucking money out in the form of interest on your debt.   You can’t move forward to a secure financial future until you know how much money comes into your life and what your life costs you on a daily, weekly, monthly, annual basis.

The good news is that you can do this.  The technology is as simple as a piece of paper or small notebook and a pen or pencil.  Write down all money that comes to you and everything you spend.  If you want to look official, you can go into any bank branch, ask for and get, a check register.  If you’ve attended a Money Wise Women conference, you’ve heard Marcia Brixey talk about tracking your money.  You even received a tracking tool that looks a lot like a check register.  These can be used to track all money coming into and leaving your life – cash, checks, ATM, debits, and credit cards.  Write down all transactions, whether manual or electronic.  At the end of the month, categorize your spending.  Where do you intentionally spend money?  Where does money wander away to?  Why?

If manually writing all your transactions down sounds too tedious, you can use a variety of electronic methods to track your money using programs such as Excel, Money, Quick Books and Quicken.  An excellent tool is the Money Minder® system ($59.95) from the Financial Recovery Institute.  I’ve been using that system for more than 10 years.  I use it for my personal life and my business.  You can get it directly from the Financial Recovery Institute.   There are websites that will help you track your spending, or even do it for you.  These sites include, but are not limited to:   Mvelopes;  and Money Pants.  One caution -- you learn nothing about your money if you use electronic tools to track your income and spending but never look at the results.

More good news is that simply tracking your spending tends to reduce your spending by about 20%.  Try it and see.  Report back to us.  We as a community are interested in your success.

Whatever you decided to do to secure your financial future, begin it.  Your plan has genius, power and magic in it.  Begin it now.

Sue Holm, JD, CFRC is a certified financial recovery counselor who can help with the mechanics of money, planning and tracking income and spending, eliminating debt, increasing savings and help resolve emotional issues around money. 

Comments

[Debbie Lacy]

Hi Sue,
Thanks for listing great resources! I presented at Debbie Whitlock's Femme Finance group last night and one of the topics that came up was this very question about the best ways to track spending. One woman told us about a template that can be imported into Excel. If you know of a good one, please pass that along.

Have you heard of PearBudget.com? One of my clients is using that with good results.

Thanks again for the helpful article!

Debbie

[Lesley]

Sue, what practical and simple advice to follow. I think anyone who wants to get serious about their money life should follow your advice here. And I loved the caution!!! Of course, we do have to look at the results.