Share Responsibility – Financial Literacy Spending Series

If you are single, you must take responsibility for your spending habits. You have to come to terms with the fact that you got yourself where you are because of the spending decisions you have made, and you are the only one who can make the decision to change.

If you are in a relationship, however, you need to share both the responsibility of where you are financially and the responsibility of making changes. It is easy in relationships to play the blame game, but you shouldn’t, especially when it comes to money. This is not the time to pit yourselves against one another and see who wins, that will only lead to more problems. You are both in the relationship, and are equally responsible for where you are financially.

The next part, is that you need to share responsibility for the changes that you need to make. You should work together to create the spending plan. Each person should track their own spending, and each month you should sit down and make decisions together about where adjustments need to be made.

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Make Spending Plan Adjustments – Financial Literacy Spending Series

Another very important aspect of your spending plan is to make adjustments where needed. This is where the wiggle room comes in, you can see how the month goes and then make changes to your spending plan accordingly. If you have an emergency and get a flat tire that has to be replaced you can work around that. With a spending plan instead of a budget, you adjust and then keep moving forward.

Life is constantly changing and things are coming at us all the time, it is important to stay flexible and head in the right direction.

Record ALL Expenses – Financial Literacy Spending Series

One very important step toward financial literacy and success with your spending plan is to track all of your expenses. Being able to visualize your spending allows you to use this information to make future purchasing decisions.

Track all of your expenses for a full month, and make sure that everyone in the family participates in this process; it has to be accurate for it to work. This means that you even have to fess up to the $1.00 a day you use in the vending machine for your afternoon candy bar. Even cash transactions count! Once you have this all added up, you will know where you stand every month because you will have the accurate amount that you spend.

Once this is completed, you need to get the amount that you earn each month. Then you will look at these numbers and see where each of these expenses figure in. After doing this, you will be able to see areas where you can save, and where you can apply extra money, such as paying off debt or toward your savings accounts.

Track Your Spending, Don’t Budget – Financial Literacy Spending Series

This might sound different than the advice you are used to getting about your finances, but there is some sound reasoning behind it. Budgets don’t work because they are static and do not account for life and the unexpected costs you will encounter. Instead track your spending and create a spending plan.

Think of this like tracking your calories in a food journal versus dieting. Dieting is hard and often times results in failure because you are being restricted, feel like you are missing out, and are being deprived. A food journal on the other hand lets you analyze the calories you have consumed and burned so that you know where you need to make adjustments and you can control your eating. A spending plan is the same concept.

To get started

Plan how you will spend your money
Track your spending
Compare your plan to reality
Make adjustments and decisions about your goals monthly.

Spending plans allow for wiggle room so that if you take a small detour off your path you won’t feel completely defeated and give up. Instead you can look at the numbers, adjust and get back on course.

Spending Decisions – Financial Literacy Spending Series

So all week we have been focusing on savings, and to cap off the week I have a post about spending. Know that every time you make a purchase, you are making a spending decision. You have a choice and you decide what to spend your money on.

There are three questions you should use to guide you through the decision making process each time you make a purchase; Utility – is this something I need or something I want? Availability – do I have the money to buy this right now? Affordability – Does this fit into my long-term goals?

These questions are great guidance and cause you to really stop and think about the decision you are making. When I was younger, I never really thought about spending money and how it affected my future, I just did it. As I have gotten older and the reality of life has set in, I have realized that I need to be more thoughtful about what my actions today will mean for my future.

Here are some tips that might help you make spending decisions:

If you are shopping, walk around the store with the item in your hand and ask yourself the questions, 9 times out of 10 you will probably find a reason why you don’t have to have it.
When making a big purchase decision, sleep on it. Think about it and don’t be impulsive.
Ask for advice from friends and family they might have a perspective you haven’t thought of.
Really think about the long-term to give you perspective.