A Mindset for Money Reflection
To build a better mindset for money, I suggest you prepare for the new year with some reflection over how you handled your money over the past year.
Looking forward without looking back can translate to little change, good or bad. Improvement can only come by recognizing the errors to correct. That means facing the facts.
Remember to find and use the facts. Dreaming up numbers will not serve you well.
What Is Your Status Financially?
Are you feeling comfortable? Do you have enough in savings to weather most financial storms?
Look at your balances in savings, investments, and your checking account. How do they compare to the beginning of last year? And where would you like to see your balances at the end of the coming year? Write them down. We call those your goals.
The Results Can Be Controlled by You
The balances at the end of the coming year will depend on your efforts to control your spending and improve your income.
All your income does not have to come from your primary employment. There are many part-time income opportunities available. You will see them if you look for them.
Living expenses can vary with you having an influence to reduce the monthly and overall amounts of spending.
Most of us seem to have a problem with accumulating debt. Do you want that to continue? Your reduction in living expenses should help you reduce or eliminate your debt. Paying debt down to reduce those payment obligations must be a priority in your monthly budget reflection.
You Spend More Than You Think
A detailed reflection (if you keep receipts) of your spending over the past year will reveal some amounts over what you thought was spent on groceries, eating out, fuel, gifts, and home decorations.
If nothing else, do a quick summary of spending according to your credit card statements and bank statements.
There are some types of spending which are more difficult to control, such as health insurance, life insurance, auto insurance, utilities, and housing. Changes to those require more research and some dynamic changes.
Eating out can become a costly habit. And careless grocery shopping can build along with choices that include prepared food items.
Where you eat out can vary in quality, quantity, and cost. Choose wisely.
Cooking at home can be enjoyable if you plan your meals and work together. But be cautious about desserts! Personally, I like to grill meat and vegetables.
Smart shopping could include limiting trips to the store to save on fuel.
I will caution against getting your food delivered unless you are limited on time due to a second job.
There are, of course, the luxury items of cable TV, streaming services, and internet, which can be easily eliminated costs. Yes, you may have to use the library for internet and get a new antenna for your TV. However, if you are serious about being able to save more or pay down debt, this is a low-hanging fruit for savings on your spending.
Work On a Plan
Once you have reflected on your realities for income and spending, you can formulate a plan for the new year. This is your chance to be more effective with your income and feel more in control of spending to put yourself in a better place financially over the next year.
If you are already in the practice of tracking your spending and bank accounts, then you are well ahead of most folks.
Some processes for tracking are more detailed and time consuming than others.
In this age of apps and shopping online, you will be tempted by many ads and may find that you lose track of all the expenses that will come to you automatically, like a subscription. And, if you are using a credit card, the long-term effect may take longer to notice.
Do your best to track your commitments and be cautious with your online shopping, keeping your current bank account balance in mind while you are online.
Keeping that part of your spending under control is easy to do and easy not to do.
One of the best filters you can put on your spending is to decide if that item is a need or a want.
Find a Place for Needs and Wants
You generally cannot avoid needs for long when it comes to spending. However, wants can be delayed.
Needs are what it takes to survive. Food, housing, and transportation to a job to earn income. Working from home, you may need a computer unless the company provides one. Insurance may be considered a need unless you like the risk of losing all your assets due to an illness, storm damage, or hitting a deer on the highway.
Wants are items we get to make us feel better or make us feel better off than we are. Items that are wanted may include a newer vehicle, newer clothes, a bigger house, and other items you may see browsing the internet that would make your life easier and more comfortable. Those items can be delayed until you can afford to pay cash for them.
Make This Year More Rewarding
Reflection on what you have been doing and committing yourself to doing much better can make the next year much more rewarding.
Identify your bad actions in spending and replace them with good actions. Be responsible to yourself to build a better mindset for money!