Years ago, when I was on the top of the financial world, I would balance people’s ledgers for them. They couldn’t learn to save money until they first knew where their money was going. It was something that I am so passionate about and am good at, so I often got many clients. I remember one young man in particular who’s ledger I was sorting through on a monthly basis. He could not pinpoint where all his money was going. In his mind, he spent frugally, paid his bills, did everything right, but at the end of the month, was overdraft and couldn’t figure out for the life of him, where all that money was going. He was over drafting by about $500/month! And you know banks love it when you over draft! They collect fees on top of fees on top of fees!
Like all good ledger accounting, I took the amounts of everything and put them in ‘like categories.’ So, in one given month, I could tell him, you spent $xx on fast food, $xx on entertainment, $xx on bills, $xx on gas, $xx on daily living expenses, etc. Well, I tell you plainly, that I figured out where all his money was going rather quickly. In a very short amount of time, I could clearly see HIS STORY. I noticed that in the evenings around 6-9 pm many days out of the month on his transactions list, that he had purchased fast food. The fast food transaction amounts ranged from $8-$15 and there were approx. 20-25 days in which this was occurring. Now, I tell you, this man was as skinny as a stick, so I have no idea what he was doing with all this unhealthy food. But the point of the matter is that he was spending a good $300/month just for himself in fast food!
It didn’t take long for him to tell me that often times, he was tired after work and just stopped and got something. No big deal. I then proceeded to ask him how much he thought he spent in fast food in a given month. His answer astounded me. He said, ‘oh about $100 I reckon.’ When I told him that he was spending $300 in fast food every month and how all those trips almost daily to get that food, raised his GAS bill (!!!!!!) by another $100/month, well, lets just say I can’t repeat that part. He was flabbergasted. It doesn’t dawn on us how little habits add up to BIG MONEY BLUNDERS.
What little habits are adding up to your demise? What’s your story?
We don’t have an accurate picture of our spending habits, until we come clean and tell ourselves the truth. Only then, can we begin to REALLY save money. We can’t fix something we don’t know is broken. If your struggling with finances, I’d highly encourage you to start adding all your expenses up into categories for a few months to get an accurate picture of where your money is really going. Then, take little steps each day to change it. This step alone will change your financial picture in a huge way! I’ve seen it many, many times.