At times, it can seem as if you spend money faster than you make it. Money is certainly easier to spend than make, which is why so many people find it difficult to track their spending. Between essential expenses you have on a monthly basis and entertainment and hobbies, your money is all over the place. There’s nothing wrong with enjoying the fruits of your labor, but aren’t you at least curious about where your money is going and how you can keep more of it every month?
The United States is the “land of opportunity,” but capitalizing on those opportunities starts with making wise financial decisions. However, if you want to change your spending habits, you have to stop avoiding your balance sheets and commit to creating a budget. In this article, we’ll give four steps to tracking your spending and making better financial decisions.
1. Categorize your spending.
The first step to managing your finances is categorizing your spending. As we mentioned in the opening, you have your monthly essential expenses and everything else, but you need to break those two categories down further.
One of the ways consulting a financial advisor can help you is it could help you develop a healthy appetite for investing and tolerance for risk. Having a budgeting and saving strategy is great, but having an investment strategy is essential to creating wealth. An advisor could show you how to diversify your investment portfolio by investing in U.S. and Canadian stocks and how to save for retirement. Ultimately, it’s a financial advisor’s job to make your money work for you.
2. Log all your spending
The next step is logging all your spending. For this step to work, you have to document every penny you spend at all times. There are various interactive tools online you can use to track your spending. So, whether you purchase CBD extracts at the local dispensary or buy CBN online, you can document it in an app.
You can even use these interactive tools to categorize your spending. Let’s say you wanted to label your CBD and CBN spending as part of your wellness spending. You could link your bank account or debit card to the app, and when you use it to purchase a CBN or CBD product, the app will automatically document the transaction under wellness spending.
3. Speak with a financial advisor.
Once you have an accurate picture of your spending, it’s wise to speak to a financial advisor. They can help you set realistic financial goals and get on the road to financial independence. A financial advisor can also help you develop a strategy to improve your credit score and come up with a new budget plan to help your net income stretch further.
4. Be willing to make significant changes to your spending.
One of the keys to financial freedom is learning how to spend wisely. We’re not saying you shouldn’t enjoy your money. You work hard for your earnings, and all work and no play isn’t good for the spirit. However, neither are poor spending habits, which is why it’s vital that you be mindful of your spending and be willing to make adjustments when you recognize problematic spending habits.
Tracking your expenses is key to achieving prosperity. Categorize your spending so you can get a better idea of how much you spend on essential monthly expenses like utilities and groceries and how much of your paycheck goes toward wasteful spending. From there, track all your spending. It’s also a good idea to create a monthly budget or spending plan to guide your spending. After all, making better financial decisions is key to better financial outcomes.
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