I once met someone who told me a story that made quite an impression on me. He told that at one point, his wife and he were in deep financial trouble and didn’t know how to get out of it. He was told to write down all his expenses during the month. At the end of that month when they made the summary of what went where, he saw to his great surprise that he had spent close to NIS 5000 (US Dollar 1430) at things like coffee, soda, ice cream, take away and other small things. These were all small purchases that he spent here and there without thinking too much about them.
This is maybe an extreme example, but I think that most of us spend our money on things that we don’t even know or remember afterwards (I know that we have the tendency to do so). The trick is simple and something I both use myself and recommend clients to use – writing everything down! It can be on an app or on a excel sheet or in your calendar. Basically anywhere that works for you.
It might seem like a chore but it is very effective and has two great outcomes:
1) It makes you aware of where every sum went
2) It makes you think twice before buying everything
What is great about this, is that you don’t have to do it for every month for the rest of your life. A few months of writing down your expenses will give you a pretty good picture of where your money goes and what your spending habits are. And whenever you feel that you spending is again getting out of control, a few months of documenting will help you get back on track. That is what I do….