Blog 1 - Understand Your Money
The beginning of the year is a great time to reflect on the last twelve months and plan for the next twelve!
If you met your goals for last year, congrats, now it’s time to make new ones! Or perhaps you weren’t able to accomplish all you had planned and that’s okay - the new year means a fresh start! Are you already working towards your goals for the year?
At least one of my objectives each year is a financial one. I’m either trying to cut back my spending, set funds aside for a new purchase or investment, or increase my families emergency fund. I’ve found that in order to do anything new financially you have to first understand your money. “How much is there coming in?” and the big question…”Where is it going?”
In order to realistically plan your financial goals you need to understand what your money is currently being used for - and it may surprise you! Of course there are the big expenses each month (i.e., mortgage/rent, vehicles, insurance, groceries, childcare etc) but there are a lot of other places your money goes that you may not even realize until you see it in laid out in front of you.
One thing I’ve been doing for the last several years to help me understand my money is to track my purchases. I mean EVERY PURCHASE… including my regular coffee with oat milk at my favorite local coffee shop Valkyrie.
And the ONLY way I’ve found success in tracking my expenses is by entering them myself, by looking at my account statements and manually entering them into a spreadsheet. Yes, I’ve tried those apps that automatically link to your bank accounts but I’m not a fan. I find they incorrectly categorize or miss things and I end up spending so much time figuring out what errors were made I think it’s easier just do it right the first time!
The spreadsheet I use and highly recommend is the Home Base CFO Spreadsheet by Paper + Spark. It’s so easy to navigate and does come with instructions if you aren’t the most spreadsheet-savvy and you can reuse it every year which I love! It has tabs for your categories and is complete with graphs for visually understanding your finances. I personally enter my expenses bi-weekly so that it’s not such a cumbersome task and it only takes about 30 mins time.
Once you see where your money has been used in the past, you can plan on how to better manange it in the future. So please consider taking the time to start tracking your spending. I promise it will help in more ways than one!
Make sure you check out my next blog where I give tips on how to recognize overspending and ways to cut back.
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