Tis the Season - Four Tips for Holiday Spending!

If you are like me, you were probably surprised when you saw a Target Christmas commercial three weeks before the Thanksgiving holidays. Perhaps you have been telling yourself for the past couple of months that you are going to start shopping for Christmas items. Or, maybe you are like most people (me) and haven’t given the Christmas holidays much thought. In either case, it’s never too late to create a holiday spending plan (budget).

The average American will spend more than $1,000 over the holiday season. My advice is to try to remember the primary reason for the season. Over spending usually occurs when we get carried away trying to please others. You may still have a joyful holiday season without going broke in the process.

The following are four keys to budgeting for the holidays:

Figure out What You Can Afford to Spend – The first step to wise spending during the holiday season is to decide upfront what you can afford to spend. The best place to start is to look at what you spent last year; do you feel good about what you spent? Were you still paying it off three months later?

The next step is to evaluate your financial status for this year and compare it to where you were last year. Can you afford to spend the same or less? The key is to come up with a specific dollar amount that you can reasonably afford to spend during your holiday shopping. Also, keep in mind any upcoming expenses you may encounter in January that will need to be taken care of such as property taxes etc.

Make a List & Set Limits – Take some time to think of each individual that you would like to purchase a gift for this season. Create a list, and be sure to include everyone such as your child’s teachers, co-workers, family members, and friends. Now, look at the people on the list and decide who could get a gift card rather than an actual gift.
Next, use the specific dollar amount that you have determined and spread that amount among the people on the list. You may assign a range per individual. For example, you are going to spend $75 - $100 for mom. Remember, it is not illegal to spend different amounts of money on different family members. Make sure that all the ranges added together do not take you over your pre-determined limit.

Track Your Spending – Be careful using credit cards during the holiday shopping process, because it is easy to get carried away when you are spending on credit. Studies show that individuals spend 12% to 18% more using credit than cash. You may want to create or download a holiday shopping spreadsheet to keep track of your spending. Consider using cash whenever possible. If you don’t feel comfortable carrying cash, you could purchase a preloaded Visa gift card for your holiday shopping. When the card is out, then you are done. At the very least, you will have an opportunity to figure out what you have already spent before you reload or purchase another card.

Tweak Your Budget Regularly – This is important because in most cases your budget is not static, meaning it changes based on circumstances. Stay on top of what you are spending and tweak your plan accordingly. If you find yourself over spending on one person or find a deal that you couldn’t pass up then you will have to make adjustments to your list. Maybe, someone that you intended to buy an actual gift for will end up on the gift card list. At least you are not overspending. Overspending on one person will force you to decrease the amount you may spend on someone else.

There you have it, four tips to have a wonderful holiday season without breaking the bank in the process. Remember, the holiday season is about enjoying time with family and friends by letting them know that you love and care about them. Lastly, it does not hurt to manage expectations before the holidays by letting your family, particularly your children, know that you plan on cutting back this year.

This article was written by Lonnie R. Mathews for the Who's Minding Your Money blog. Lonnie is an author and speaker in the area of personal finance. To learn more about Lonnie or to contact him visit www.lonniemathews.com

 

Five ways to improve your credit

I recently downloaded a FREE copy of mine and my wife’s credit report from one of the credit reporting bureaus. Checking our credit report is something that I do often. With identity theft on the rise and companies like insurance companies, landlords and utility companies are all checking your credit to determine your final cost. It is important that we all stay diligent and on top of our credit.

As I travel the country, doing financial workshops and seminars, the workshop that usually produces the most questions is the credit workshop. Checking your credit report regularly is necessary; however, checking your report is only part of the equation. The other part of the equation is your credit score. Your credit score is what lenders and the previously mentioned companies use to determine your credit worthiness.

Your credit score is a mathematical formula created by companies like The Fair Isaac Company (FICO) to predict how you will pay your future financial obligations. The credit score is a three digit number that rates consumers past relationship with creditors. Your score ranges from 350 to 850, a score of 850 puts you in a small percentage of individuals with premium credit, a score of 350 means you couldn’t finance a pack of gum. The following are five things that you could do to improve your credit score.

IMPROVING YOUR CREDIT SCORE

When it comes to improving your credit score, the first thing you have to remember is that your score changes as often as your report does. Since most creditors report information to the credit reporting agencies monthly, it is safe to say that your score could change as often as monthly. To improve your score you must be patient with the process and let time work to your benefit. I have to be honest the process could of getting better credit could feel like watching paint dry, but if you consistently follow healthy credit habits your score will change faster than you think.

Fix all errors on your credit report immediately

One survey reported that some 52% of individuals surveyed had at least one major error on their credit report. You want to fix any areas on your credit report that has errors. You can get a free copy of your report by going to the following website www.annualcreditreport.com Consumers can access a free copy of their credit report every twelve months from all three-credit bureaus. Therefore, you should get your report, check it for errors, and dispute those errors right away.

Pay your bills on time

The largest percent of your credit score (35%) is based on payment history. You want to build a strong payment history to get your score higher. The longer that you go without any late payments the higher your score will be. This is the best and fastest way to rebuild your credit. Having one 30-day late payment could decrease your score as much as 20 points. Even if you have had credit problems in the past depending on the size of the debt and how many creditors you have, a good 12 months of continuous payments on time could get you back on track very quickly.

Back away from the edge

Reducing your credit card balances will have a noticeable impact on your credit score. The next largest percent of your score (30%) is based on the amount owed to creditors. You never want to max out your credit limit; in fact, you want to stay below 50% of your credit limit. For example if you have a card with a $3,000 limit you want make sure the balance is below the $1,500 mark. By spreading your debt among all of your cards so that you are below 50% of the limit can sometimes improve your score.

Also, pay off your debts rather than moving them around. Playing the credit card shell game does not improve your score. Be careful when you are closing accounts because you could be reducing your overall available credit which combined with being close to the limit on other cards will negatively affect your score.

Commit Commit and Commit

It is natural to want to close old accounts, but keep in mind that (15%) of your score is determined by the length of time you have held credit relationships. Opening new cards and closing old ones could affect your credit negatively in the short run. Maintaining a long-term healthy relationship with your creditors will serve you better in the end. Now that you have credit, you want to keep a couple cards to develop a history and only use them occasionally.

Look Before You Leap

The last thing that you can do to improve your credit score is when you are in the market to make a major purchase you want to check your credit in advance before applying for credit. Even though new credit only makes up a small percent of your score, (10%) you still want to manage this portion of your credit score.

Every time you apply for credit it will have an impact on your score because inquires will remain on your credit report for 24 months. However, there are some things that you can do to minimize the effect of shopping for credit. Though every hit will count against you, the FICO scoring model tends to ignore mortgages and auto loans that are generated within a 30-day period and inquires made within a 14-day period will count as one inquiry.

Remember, in times of crisis your credit could be one of your most powerful tools. Not only does everyday life hinge on you having good credit, your future success depends on you having good credit. Since you have already created a history of having credit then you must do everything you can to maintain a good credit history.

Lonnie R. Mathews wrote this article for the Who's Minding Your Money blog. Lonnie is an author and speaker in the area of personal finance. To learn more about Lonnie or to contact him visit www.lonniemathews.com

The Beginning of a Movement

I remember growing up in the projects of Birmingham, Alabama.  I don’t remember us having a lot of money, and there were certainly times when things were tight financially in our house but we always managed to get by. Shortly after graduating from high school I enlisted into the United States Marine Corps and spent eight years serving my country.

You are probably wondering where I am going with this story at this point, I said all that to say, when I got out of the military I had with very little of the money that I had earned during those eight years. In fact when I look back on my life I don’t ever remember when or where I was taught about money.

I’ll bet when you look back at your financial life and all the mistakes that you have made with money you don’t remember being taught about it either.  I can vividly remember my darkest hour when it comes to mine and my wife’s personal finances. In February 2001, we were two months behind on our mortgage. The sad part of the story is that during the year 2000 we had earned close to $128K between the two of us. It was then that I came to the realization that I really didn’t know anything about money and how to handle it. This brings me to where I am now; in 2003 I created Alliance Financial Ministries, Inc. a non-profit financial literacy company. Since then I have been on an unending mission to change the lives of all who hear me speak about money.

Today, financial literacy or the lack of financial literacy has reached epidemic proportions among America’s youth. In today's world, many teens work for their own money and don't know how to handle their new-found freedom. Many young people fail in the management of their first consumer credit experience, establish bad financial management habits, and stumble through their lives learning by trial and error. According to the Jump$tart Coalition for Personal Financial Literacy, nearly a third of all high school seniors use at least one credit card, nearly half use ATM cards and more than three-quarters have a savings or checking account. However, just 20% of high school seniors graduate with any formal instruction in personal finance. Many are unable to balance a checkbook and most simply have no insight into the basic survival principles involved with earning, spending, saving and investing.

So I ask you what we are going to do about this problem. I realize the many times parents and other adults fail to help young people with money because they themselves are having financial problems so the cycle continues. I have decided that enough is enough, if not me who, if not now when.  I have taken necessary steps to create an event to teach high school through college age students about money using a real life perspective. As far as I am concerned this is not just an event it is a financial movement to change the lives of America’s youth.

This is where you come in; I need your help to make this event happen. What I need are first your prayers that I make wise decisions. Secondly, if you are in the Houston and surrounding areas I need for you to volunteer to help during the event, and lastly and most importantly I need funding. Alliance Financial Ministries, Inc. is in the process of raising funding to start the movement. We want to show our youth that they can have a better life and that they can achieve all the things that they are destine to achieve and that we are here for them.

So my friend if you have a teenager, if you know a teenager or if you have ever said to yourself or out loud, “I wish I had learned more about money when I was younger” now is your opportunity to make an impact in the lives of America’s youth. You can do that by joining this movement, to learn more about this live change movement that is about to happen please take a moment to visit our website. Also like our MoneyLive Facebook page and pass this message along. More importantly I need for you to take the time to make a donation to the cause. You can give whatever your heart says to give. We are trying to change generations and that starts with a small donation on your part.

For more information on this life changing moment checkout our website   http://www.moneylive2012.com/  

 Thank you for your time and thank you in advance for your support

Kids and Money – 5 tips to raising money smart kids

I recently  did something that I hope will change my legacy forever. I am hoping that this single act will have a future impact on all my decedents for generations to come. What is this profound act that I speak of you may be asking, well eighteen months ago I took my then 8 year old and 11 year old daughters to our local credit union and open them a savings account.

I have come to realize that many adults are in financial trouble today because they were never formally taught how to properly handle money. I can honestly say that I don’t remember ever being taught a system of money management to get ahead in life.

The results of students who took the 2008 Jump$tart Coalition Survey of Financial Literacy for personal finance received failing scores. A majority of the 4,000 High school students scored an all-time low score of 48.3%. This month I want to share tips on how to raise money smart kids. Like all parents I want my kids to grow up happy and to have some of the things life that I wish I’d had growing up. At the same time I realize that we as parents have to find a balance between giving our kids too much. In the end I want to instill habits in them that will allow them to be productive and to thrive. So how do you make sure your children grow up to understand the value of a dollar, hard work and to pay their bills. It’s simple you teach them, here are five tips to raising money smart kids.

Be an example – when it comes to teaching children about money the best example will be the one that you set. If a child doesn’t ever see their parent(s) exercise discipline, how can we expect them to understand the concept? I am convinced that the reason that more parents don’t teach their children about personal finance is because they themselves haven’t gotten a handle on money. This may mean that in order to be an example you may have to get yourself educated on financial matters before teaching your kids about money.

Start Early – It is never too early to teach kids about money. However, what you teach then should be age appropriate though. To teach kids to be responsible about money you have to first teach them how to be responsible period. You can start as early as two years old to teach children how to make choices. Making choices is a part of life and a big part of learning how to handle money. You can start by teaching kids the concept of, you have to choose from two or three items and you can only have one for now.

If you don’t start the process of making choices early in life how do you expect a 16 year-old to understand that they can’t have both a laptop and an I-pad. Especially if all their life you have given them what they want, when they wanted it. I remember when my kids were younger and we would be shopping and one of them would say “Dad can I have this?” my response to them would be “we do not have the money for that today but if you save some of your money then perhaps we could come back and get it another day”

Let them have skin in the game – It is vitally important that you allow kids to participate in the purchasing process especially if it is something that they want. I have learned that humans, particularly kids are very impulsive. If they see something that looks cool then they want it, no matter what. Like anything else in life we tend to be a little less careless when we have something to lose. If there is something that your child really wants you can test how bad they want it when you make them use some of their own money rather than using yours all the time. I remember when my oldest daughter wanted an electric toothbrush that she had seen on one of our trips to the store. She pleaded with me to get the toothbrush and that she would pay me back with she got her allowance.

I told her “why don’t we wait until you have enough money to buy the toothbrush and I would gladly bring you back to the store to get it.” Several weeks later, after saving her allowance my daughter finally had enough money to purchase her $10 electric toothbrush. We get to the isle where the toothbrushes were and I asked “do you have your money” my daughter looked at the money in her hand and she stared at the toothbrush for a long time. Finally after about three minutes of thinking she said “Dad now that I have some money I think I want to wait and get something that I really want. I already have a toothbrush at home” PRICELESS!

Work = Money – This concept is quite simple, we must teach our children that money comes from working for it. I know I spoke of an allowance earlier in the article and that is something that my mother has chosen to give my kids. For me I choose to let them earn the money to buy the things that they want. There are certain chores that have to be done and my kids won’t get paid for them, like keeping their part of the house clean or folding their own clothes. However I have set aside a short list of other chores that my kids can choose to do and earn some extra cash. The list doesn’t have to be complicated something simple like sweeping up my man-cave (garage) or helping me with a project around the house. The important thing here is to help kids make the connections that you have to work in order to earn an income, nothing is free!

Develop good money habits – Where you are today financially is the result of the decisions that you have made and the habits that you have developed up until this point. To get kids on the right path you have to help them develop good habits early in life. If you were taught to save at an early age then it won’t be hard for you to understand the concept when you are an adult. Good habits lead to good decisions and good decisions lead to prosperity and the opposite is true about bad habits.

Look at where you are financially and compare that to the habits that are a part of your everyday life. If you have made good decisions and have developed good habits then you are probably in a good spot financially if not then – I don’t have to say it do I? There is no secret to raising money smart kids; it’s about making the effort to make sure they understand how money works early and often.

This article was written by Lonnie R. Mathews for the Who's Minding Your Money blog. Lonnie is an author and speaker in the area of personal finance. To learn more about Lonnie or to contact him visit www.lonniemathews.com

Four Financial Moves for the New Year

It’s that time of the year, you know when the air is crisp, the temperature is low and everything is centered on the Holidays. As another year comes to an end, many people spend time reflecting on the things that they have done and the things they want to do in the coming year.

For me, this is the time of the year when I like to spend a few moments figuring out what I have accomplished financially and what I would like to accomplish in the coming year as well. While I am sure there are several things that should be done and need to be done with regards to my personal finance I have narrowed my list down to the following must do things.

To set the course for next year here are four things that everyone should do to get ready for the new financial year. By doing these things you can go into 2012 with confidence and a good Idea of what you want to accomplish. After things have settled down from the holiday, you have put the Christmas tree back in the attic and before you get back to the grind of everyday life spend a few moments to:

1.   Review your finances -- This could mean different things to different people so I will try to narrow this area down. Reviewing your finances can be as simple as taking the time to organize all of your financial documents from the previous year. Depending on how organized you were during the year this may only take a couple minutes, for others this could be a HUGE task. Either way you should take some time to gather all of your important financial documents and put them in a safe place.

Next take a moment to review your income from the previous year and your expenses from the same time period. The income part should be easy; all you have to do is look at your last pay check stub to see how much income you made last year. For most people this will shock you or maybe not. Now that you know how much you made last year lets figure out what you did with it. You should be able to determine what your major expenses were, like what you spent on your vehicle. If you made a car payment all last year simply multiply your payment by twelve to see how much of your income was spent on making car payments. You should be able to do this for every major bill.

By doing this you will be able to see what you need to work on for the upcoming year. Also, when reviewing your finances be sure to check your insurance policies (life, health, disability, auto, and home) making sure that you are not either under or over insured. Also check that you have the correct beneficiaries listed on all polices. Check to make sure your will is up to date and if you don’t have a will GET ONE. The last thing to do while reviewing your finances is to gather your tax records from the year and be prepared to file your 2011 tax return as soon as possible (unless you are like me and you owe then you can wait a while)

2.   Review Your Net-worth – most financially successful people, focus their time and attention on their net-worth. The one true path to financial independence is to increase your net-worth year after year. Your net-worth is basically the total of the fair market value of all of your assets (home, car, cash accounts, retirement accounts and personal belongings) minus the total of all the debts that you owe. The difference between the two is your net- worth. This number should be a positive number, and to build wealth your net-worth should go up every year.

By doing this you can see the effect of the decisions that you made financially last year and how those decisions impacted your net-worth. This is also a good time to review the debts that you have accumulated and more importantly come up with a plan to reduce those debts. The quickest way to increase your net-worth in not by getting more assets rather reducing the liabilities associated with the assets that you currently have. You should make every effort to quickly reduce your short-term debt (credit cards, personal loans) and continue to manage your longer term debts (mortgage).

3.   Set New Financial Goals – Yes I said it, set some financial goals. I am convinced that most people are not where the want to be financially because they don’t have goals. It is a well-known fact that those who establish, write down and track goals accomplish more. After looking back at the past year you can tell if you actually accomplished what you wanted. Now is the time to decide what you want to accomplish next year and set some written goals. Next, take a few moments to develop a plan to make those goals become a reality. I have written several other articles on goal setting, there is even an entire chapter dedicated to goals setting in my latest book called “Spend Everything”. Bottom line you need goals so that you will know where you are going financially.

4.   Simplify Your Finances – The final thing to do to get ready for next year financially is to make your life as simple as possible. You can take a lot of the drudgery out of financial record keeping by streamlining the process. I personally use an online bill payment system, which is free at most financial institutions; the key is to examine every financial relationship that you have to see if it is something that you would like to continue to do next year. If not then get out of the relationship, when was the last time you visited the gym with any regularity? Maybe it’s time to cancel your membership and save a few dollars in the process. You can walk for free if you are serious about getting in shape.

I realize that there are probably several more exciting things that you can do with your time during the holidays but I firmly believe the saying that says “your position in life today is the result of the decisions that you made yesterday” if you want a better financial outlook next year do something different this year. Remember money is only a tool that allows us to do what is important in life, you have to manage your tools to complete the job.

This article was written by Lonnie R. Mathews for the Who's Minding Your Money blog. Lonnie is an author and speaker in the area of personal finance. To learn more about Lonnie or to contact him visit www.lonniemathews.com

Money & Marriage – Five ways to get on the same page with money!

I was recently asked to speak at a marriage retreat on the topic of money and marriage. Therefore, I decided to take what I discussed and make it this month’s article. When it comes to money and marriage one of the leading causes of divorce is financial problems. According to John Thyden, a prominent Washington, D.C., divorce attorney. “Financial issues are the primary reason for 90 percent of divorce cases I handle,” says Thyden.

When my wife and I got married almost fourteen years ago, we both agreed that money would never be the cause of our marriage not working. It could be anything else but not money, and so far, we have stuck to that promise. I personally think that the biggest issue with money and marriage is not so much the amount but rather the differences in the spending habits of each person and their lack of communication about money. In all my years of studying, writing and speaking about personal finances, I have come to the realization that in most marriages there are spenders and savers.

The spenders like to spend with no accountability and the savers just want to save and penny pitch. This on the surface may not seem like a huge deal but underneath this could cause the communication problems that fuel money and marriage issues. The following are five things a married couple could do to get on the same page with money and marriage.

1.   Shared Financial Goals – like any partnership, it is important that both husband and wife have common financial goals. I recommend that each spouse sit down individually and write down several financial goals that they would like to achieve within specific times. Each should write down short-term goals (to accomplish within one year), mid-term goals (to accomplish within five years), and long-term goals (to accomplish five years and beyond). After writing down goals, both husband and wife should come together and determine which goals to work toward together.

2.   Clarify Expectations – Couples should sit down and articulate what each one expects to accomplish financially. Topics to be covered could include expectations about lifestyle, spending, saving and more importantly, who is going to handle the bill-paying chores. In most circumstances, one spouse is better at taking care of financial matters. This is the best candidate to handle the day-to-day bill paying duties.

3.   Financial Transparency – When talking to couples about money I always stress that the there should be financial transparency in your relationship. What I mean by that is each spouse should have access to all financial accounts and such. A survey by Smart Money Magazine revealed that of couples polled as much as 36 percent of men and more than 40 percent of women admitted to lying to their spouse about how much they had paid for a particular item.

My wife I have made the choice to have all money deposited into one household account. We also decided how much money she would need to have available to her for day-to-day expenses and that amount is put into a separate account for her. The transparency comes in because all banking accounts are joint accounts and both of us have access to all accounts. This prevents one spouse from hiding anything from one another.

4.   Everyone must be involved – Earlier I mentioned that there is usually a person in a marriage that is naturally better at handling the finances and that person should probably take care of the day-to-day activities. However, that does not mean that the person not handling the finances shouldn’t be involved. To get on the same page and stay on the same page all parties should have a say in how the household money is spent.

This means that there should be constant communication between couples whenever money comes into the household. One way to get on the same page is to have a short (and I do mean short) budget meeting a couple days before payday. If payday is on Friday, then on Tuesday or Wednesday that same week couples should sit down and decide how the upcoming paycheck should be spent. By doing this, everyone is automatically involved and knows what is going with the family finances. My wife and I have been doing this for the past eight years and it has made a world of difference in how we handle our finances.

5.   ­­Keep It Simple Silly (K.I.S.S) – My final recommendation for getting on the same page in a marriage is to keep things simple. You shouldn’t over complicate your finances when you don’t have to. Sit down with your spouse and come up with a plan that works for your family.

Getting and staying on the same financial page has to be one of the most challenging parts of communicating in a marriage. Between kids, careers and all the other things that are required in marriage money problems shouldn’t be one of them. Remember, compromise is an important part of any marriage's financial plan. Couples should work together to set goals that compliment your individual plans as well as the future of your household.

This article was written by Lonnie R. Mathews for the Who's Minding Your Money blog. Lonnie is an author and speaker in the area of personal finance. To learn more about Lonnie or to contact him visit www.lonniemathews.com

Three ways to take control of your finances

Are you where you want to be financially? Do you feel like things could be a little better financially but you just haven’t figured out how to change things. To have financial freedom you have to take control of your finances.  Often times after I do a speech or teach a seminar I will have someone from the audience come up to me and ask “do you do one-on-one sessions” I have toyed with the idea but never really moved on the idea of helping individual families with their finances.

The main reason that I don’t help individuals is most people aren’t really interested in changing, they are just in love with the idea of having a better financial situation. The concept to getting where you want to be financially is to change what you are currently doing and do something different. Most experts say that personal finance is 20% knowledge and 80% personal. That means to really change your financial situation you have to change you and your habits.

The first major step to getting  your financial house in order is to get control of your finances, this month I want to give you three things that you can do to get your finances on the road to recovery and where you want to be.

1.      Organize your finances

The official definition of financial management is; the process of prioritizing the allocation of cash to support your goals. The real definition of financial management is being able to tell your money where to go and actually making it go there. Organized finances will help you to make better decisions about your money. By taking the time to develop, a system which allows you to grasp where you are financially you can get a clear picture of where you really are compared to where you want to be financially.

Part of organizing your finances means that you and your spouse are on the same page with regards to where your family is going financially. The next step in getting organized is to take the time to write down all the important financial information and keeping it in one central location. Have you ever applied for a loan and couldn’t find all the necessary paper work. Take some time to write down information about your finances like bank account numbers, passwords and other important information. Also, create a list of your current debts and the contact information of the companies whom you owe the debt to. Gather other documents such as birth certificates, insurance policies and marriage certificates and keep them in a fireproof box for easy and quick access. This also makes it easy to have everything with you should you have to evacuate your home quickly.

2.      Automate your finances

Have you ever woken up in the middle of the night and wonder if you paid a bill? If you are like the average American family, you have several monthly financial obligations that need to be paid.  These days, most companies will tack on an additional charge if your payment is not paid on time. Consistently paying your bills late could end up costing you hundreds of dollars each year. The next thing that you should do to gain control of your financial situation is to automate your payments and have then taken directly out of your bank account. I will admit it is easy for me to automate my finances because I love technology.  

Most banks have free online bill pay combined with your checking account. By setting up your frequent payments in the online bill payment system, you will reduce the chance of forgetting to pay a bill, and you get a sense of control at the same time. The question or complaint that I get most often about auto-bill pay is “what if the money isn’t available with the bill is due.” I will be the first to admit that if you aren’t in control of your finances this will be challenging at first. The way I use our auto bill pay is I have all our bills set-up in bill pay and I would go in a couple days before payday and determine which bill needs to be paid and have only those amounts taken out of our account on payday.

3.       Track your spending

I know you are saying, “I knew he would mention budgeting at some point” well I am sorry to disappoint you. Tracking your spending is not the same as budgeting. When you budget your money you create a spending plan, when you track your spending you usually do that after you have already spent the money, which makes it a spending record. Either way it is important that you track what you are spending so that you will start to understand which areas you need to curtail your spending.

There are several ways to track your spending; the least expensive way is to get a note pad and a pencil from your local office supply store. Then at the end of each day take a few moments and reflect back on the money you’ve spent that day. I have been doing this for so long I don’t need a note pad and pencil I just automatically keep a running mental tab. The other day my family met a couple friends for lunch at a local seafood restaurant, our portion of the bill was around $33 with tip. Shortly after that, we decided to go to the park and hang out since it was such a nice day. While at the park, we all decided to ride the train around the park, which cost another $18. My friend and I were walking to get the cars and he asked what we were about to do. My response was “Since we just spent $51 of our entertainment budget today, we are going home to prepare a meal for dinner and call it a day”

I know that may sound like a bit excessive, but let’s face it you have to start the process of being in tune with the amount of money you spend on a daily basis otherwise what’s the alternative. There are also other ways of keeping track of your spending, you could invest in some personal financial software like Quicken by Intuit (which is what I use) or you could also set up and account on one of the free software sites like www.mint.com to track your spending.

Either way knowing where you have spent your money is the first step to creating a budget, and getting control of your finances. So there I hope these few tips served as a reminder of what you should be doing to get control of your finances. I realize that I didn’t share any new information but it is good to be reminded of things we should be doing.

By doing these three simple things, you began the process of taking control of your finances. That way your bills and your financial situation no longer control you. You can gain control of your finances by making better financial decisions day after day until those decisions become your habits. Once these things become habits you will feel more and more in control and ultimately be on the path toward long-term financial success.

“Your position in life TODAY is the sum of the decisions you have made and the habits you have created to this point. If you want to change your life change your HABITS”

This article was written by Lonnie R. Mathews for the Who's Minding Your Money blog. Lonnie is an author and speaker in the area of personal finance. To learn more about Lonnie or to contact him visit www.lonniemathews.com