I will admit, I am not perfect when it comes to budgeting and being frugal every waking moment of the day. However, consistency is the key to keeping yourself in check when it comes to spending and budgeting. Consistency has formed the habits I use on the daily to not only save money, but budget appropriately.
If you are like me and are new to the budgeting world, first of all, welcome! Starting a budget is one of the more adult things I have done in my life, and I have to say it’s been a bit scary, but equally thrilling. Sadly, budgeting is not all glitz and glamour and you may be the only person who’s actually excited about your budget BUT it’s still a good feeling nonetheless.
Before I mapped out an actual concrete budget, I started becoming more financially conscious. This step is important before you sit down and actually map out your budget, because it allows you to get an idea of how and where you’re spending your money. I personally recommend taking one month to map your expenses so you can see what you spend your money on.
So, for a whole month I tracked my spending and basically had to pick my jaw up off the floor when I realized what a monster I was. I had no concept of saving money let alone getting on top of my bills whatsoever! So, after looking at one month’s spending, I had to sit and make some changes. I gave myself another month before hammering out a concrete budget. Why did I do this you ask? I did this simply because if I had built a budget off of my initial one month ‘assessment’, no budget in the world would be able to justify that I was over spending. In simpler terms, I was spending more than I made, and in order to create a workable budget I had to reign in my spending.
In one month, I transformed my mindset and spending goals. I am still not perfect to this day, but creating the right mindset was key for me to focus on saving instead of spending. From the mindset, I then created my financial goals (which will look different depending on your salary, wants and needs). In order to be in a financially conscious mindset, I created several habits to engage in to help me stay on track. Listed below is the tips and tricks I used to become financially conscious and seriously cut down my spending.
Become intimate with your finances
The grossest part of becoming financially conscious was me opening my online banking and staring at what I had done. In order to become financially conscious, you need to be aware of the INS and OUTS of your account. This is a little painful, and was different from my shove-it-under-the-rug approach, but being up-to-date with your bank account is the key to make this all work. You need to know what’s going on inside your account, and the only way to do that (unless you plan on appointing someone else to entirely manage your finances) is to be AWARE.
See a financial advisor
I have a few tips and tricks up my sleeve, but the real goldmine is the financial advisor at your bank. These are trained professionals who work with money all day! I booked a FREE appointment with my financial advisor to go over my spending habits, and come up with a plan for my spending. This helped me to become even more aware of expenses I was not noticing, as well as how to distribute my income better over my expenses.
Track your daily expenses
Again, really gross and can be quite painful to see what you’ve spent in a day, but do it. At the end of every day, I sit down and jot down in my planner what I spent and where. This makes me visually aware of the numbers, and I can see them adding up right before my eyes. Half of the battle of becoming financially conscious is becoming aware of the seemingly harmless purchases we make each day. Putting them down on paper is one more concrete way to see where your money is going.
Analyze the patterns and look to make modifications
Analyze seems like a pretty heavy duty word, but what I mean is look at where you’re spending money over and over again. I recommend taking out a bunch of coloured highlighters, and assign frequent purchases a certain colour (ex. coffee, grocery store, clothing store). This will make you more aware of the frequency of which you are spending money on these items. Now, once you see the colour pop up over and over again, then it’s time to analyze further. Ask yourself “is this something I need, or want?” If you see the word ‘fuel’ highlighted more often than not, that may be a necessity. Groceries are also a necessity. The coffeeshop you visit daily? Maybe not a priority right now. Assess whether you can cut down the frequency of the spending or eliminate it entirely. You can check out my blogpost 15 Ways You Can Save Money With Minimal Effort to modify these areas of spending further!
Be honest with yourself
I can assure you I am a ‘yes’ person. As in YES I would love to go out for drinks/dinner/shopping/horseback riding/taking a rocket to the moon. I love doing all of the things and that was part of my downfall. I never cared whether I had the money for it, I just wanted to do it ALL. Now, before I go out for an activity, I check my budget for the week as well as my previous spending for the week. Did I already go out to lunch this week? Is this the third time? Can I really afford it? In order to stay within your financial goals, sometimes this means saying no, or taking a rain-check to plans. Honestly ask yourself ‘can I afford this right now?’ and make your decision based on the honest answer to that question.
*Disclaimer: this is not to say never go out and have fun with your friends. NOT what I’m trying to say. This is making yourself aware of your financial standing and your budget before agreeing to plans. I recommend incorporating funds into your budget for going out and having fun!
Making a list of wants and needs
Not glamorous, I know. But, sitting down and being honest with yourself about whether your next purchase is a want or a need will help you determine the urgency of which you need that item, and whether you will need to incorporate that purchase into your budget. This can also help ease the stress of ending up at a store, just ‘going to take a look’ at said item, and then having the internal debate on the spot of whether you need that item or not. Planning ahead of time will ease some of the decision-making on the spot. I’m all for buying myself a treat, but treats should come secondary to purchasing a need, and should also come secondary to staying within the budget. Plus, keeping a small list of wants is a great way to have an idea for upcoming birthdays and holidays!
I do firmly believe in living your best life and having a blast. I’m all about the fun and seek to make my life as enjoyable as possible. However, I also firmly believe in working hard and being financially stable. Financial stability can seem like a tough and daunting task, but it doesn’t have to be. I am a reformed impulse buyer, and I truly notice the positive impact becoming financially conscious has had on my life. I hope you truly take these tips and incorporate them into your daily lives to become aware of your spending habits!
Did any of these tips help you? Did you try something else that was super effective? Let me know in the comments!