If this is your first time here, Molly’s Money is a regular series I write on this blog that includes ALL things personal finance – debt management, budgeting, home buying, savings, investment, etc. I am NOT a financial advisor, but I am married to one! These are just things that I have learned over the years as I struggled with my own personal finances and ultimately, became debt free in 2012.
I will never, ever forget that feeling that I felt when I had hit financial-rock-bottom in June of 2008. I was crippled by debt, couldn’t make the minimum payments on anything, and I was so beyond stressed financially that I felt like I was suffocating.
I was constantly over-drafting my accounts, begging my bank to forgive the hundreds of dollars in fees I was racking up. It was so overwhelming.
When I started on my journey to become debt free, I really had very little grasp on where to start. I didn’t really know how to budget, I didn’t know how to cut spending, I didn’t know how to organize myself. For me, the biggest thing that helped was just taking things a little bit at a time and applying very simple, financial tips to my life to start the process of really getting myself in financial order.
With all that being said, one of the best simple money tips I have ever heard is this:
What do I mean by inventory?
I mean, see exactly how much money you are spending on certain categories… because more often than not, you aren’t necessarily fully aware of how much you are spending.
I know someone who is in his mid-20s, he’s single, has a good job, lives in an apartment with a couple other guys (so his rent is cheap), but he spends $400-$500 a MONTH in eating out. That’s A LOT of money eating out.
I know another person who is in her mid-30s, working mother, good job, owns her home (but in a high-income area), and spends $200-$300 a MONTH at Starbucks. That is a lot of coffee!
When we stop and take an inventory of what we are spending money on and see that maybe we’re spending too much money at Starbucks, or a lot of money eating out, or too much money on clothes, etc. etc. etc. we are more cognizant of areas where we might be able to cut back. And even if we don’t need to cut back, it just helps to know and get an idea of what you’re spending money on. That way, you can adjust your monthly budget accordingly…
Also, another benefit of checking your statements regularly gives you the chance to see if you’re being charged any unnecessary fees or if you’re the victim of any kind of credit card theft / fraud.
I hope this is helpful! Sometimes the simple tips can really help get you on the path to taking control of your finances.