One thing I’ve learned over the years is that staying on top of your finances isn’t something that’s done only in January or before Christmas. Instead, you must diligently watch over your finances at all times if you want to stick to a budget and not overspend.
But how do you start if your finances are a mess? Here’s how you can begin spending with purpose and take control of your finances.
Create an Office Space
Why make this the first thing on my list? It may be confusing at first. You probably thought I was going to say something like, collect all your bills and make a budget.
Of course those are some of the steps to taking control of your finances. At the same time, if your bills and statements are a mess, making a budget will be ten times harder. That’s why first you need a place to go when you want to pay bills and begin spending with purpose.
We’re lucky to have a spare bedroom in our home that we turned into an office. We added office furniture and converted the closet into ceiling to floor shelves for storage.
Obviously that’s not an option for everyone. Your office space may be a small table in a corner of your bedroom or living room. Location isn’t as important as making it a clean, functional, usable space.
Now that you have a place to pay bills and manage your money, you need to sort your paperwork properly. There are a variety of ways to sort everything so you can begin spending with purpose. Essentially, though, it boils down to two categories:
- Unpaid bills
- Paid bills
Clearly you need to designate a place for each of these two groups of paperwork. If you want to create sub-categories, that’s not a bad idea either. It definitely speeds things up if you’re looking for a particular receipt or bill later on.
Create a Budget
I’m not going to provide budget examples, so if you were expecting that, you’re wrong. There are already thousands of others doing that on the internet. Just use your mad typing skills to look them up and try one. If it doesn’t work, change tactics and try another until you get it right.
For simplicity, I’m going to state that you want to create a budget and a method to pay bills on time. That could be an online calendar, fancy budgeting software, or a simple paper calendar stuck to your fridge.
Are you going to make mistakes? Probably – particularly if you are a first time budgeter. Still, the only way to take control of your finances is to jump in and get started.
Stick to Your Budget
Stick to your budget. Does that mean never making budget adjustments? No, of course not. You will always need to make adjustments based on what’s happening in your life at that time.
However, to really start spending with purpose and take control of your finances, you must have spending guidelines. To me, that’s really what a budget is about.
In other words, don’t let other people influence your spending decisions. Unfortunately, friends and family can influence your spending negatively.
Don’t get me wrong. I’m not placing all blame for your financial woes on your friends and family. After all, you are the one in control of your checkbook, so to speak. But you do have to learn to say no even when it’s hard sometimes.
Track Your Spending
The last thing you can do to start spending with purpose is to track your spending. I don’t believe everyone needs to go quite this far in budgeting. But it is a useful way to see where every penny goes so you can cut spending and make budgeting adjustments.
Perhaps you could even do it over a month’s time twice a year to stay on track financially. The frequency and need are really up to you. All you really need is a computer, a spreadsheet, and a few minutes every day or two to make entries.
Spend with Purpose
Now that your finances are under control you can spend money with purpose. That doesn’t necessarily mean depriving yourself of any pleasures at all. If you want to go splurge once in a while, do it. Just make sure it’s in your budget.
Make sure you make room in your budget to save money too. You want to start out with an emergency fund of at least $500. It doesn’t matter if it takes you a while to save up that much. It’s a starting point.
Once you meet that goal, work toward saving enough to cover all of your bills for at least 3 months. If an emergency happens, you’ll have the peace of mind that you can pay your bills for a while without worry.
To sum it up, spending with purpose isn’t about denying yourself of what you enjoy. It means keeping your basic bills paid and using your money wisely and purposefully. It means not spending money without thought, which can lead to debt. It means having everything you need and some of what you want.
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Do you spend money without thought? What could you do differently to take control of your finances?