A Tip to Manage Your Money? Write it Down!
This little tip helped me manage my money by cutting spending about 60%. Those results are a little skewed because I did this when I was in high school. However, the principle remains the same.
What if I told you this little money management tip can easily cut your spending by 10-20% right off the top? It can. No software package can do this for you. There is no purchase necessary. You don’t have to worry about needing fancy equipment or even a fancy new catch phrase. You just need to learn how to do this one ridiculously simple thing.
Write down what you spend.
And a collective groan ensues from the readership. Allow me to explain my findings. When I was a senior in high school I decided I needed to do a better job of saving money. Most people would naturally set some type of a savings goal. I didn’t do that. I didn’t have a set goal. I wasn’t shooting for any particular target number each month. Instead, I just wrote down everything I spent–and I mean everything. If I bought a soda out of the machine in front of Wal-Mart then I wrote down $.25 on my sheet of paper. I didn’t have some fancy software package, excel spreadsheet, or neato binder, I simply had a piece of paper that had three columns: Date, Description, and Amount. Each night I would write down whatever money I spent.
My findings were surprising. In the first month my total really shocked me. I couldn’t believe I was spending that much money. Since I was making $6.25 an hour, working part-time, it wasn’t as if I had lots of money coming in. But despite that, I was shocked at the amount of money that was flowing out.
The next month, my spending total was literally cut in half. The important item to note here is that I did not make any special effort to save any money. I simply had made the goal to write down everything I had spent. Let me repeat that: I made no extra effort to save money. I simply wrote down the item every time I spent money.
The next month, the amount from the previous month (50% lower than the first month) dropped another 20%. This means that in three months I had curbed my spending 60% from the original amount. During the third month I really did notice a difference in my spending habits, whereas during the first and second months I hadn’t noticed much difference at all. The difference I did notice during the third month was interesting. I wouldn’t spend money because I didn’t want to have to write it down later. Writing it down was annoying enough that I would forgo stopping at a restaurant to grab a bite to eat, or buying a new shirt when it wasn’t planned. Writing down my expenditure made me not want to spend as much money.
Even more encouraging than the drop in expenses was the “status-quo” feeling I was still maintaining. By this I mean that during the previous three months of writing expenditures down I had cut my spending by 60% but I didn’t feel any different. I didn’t feel deprived, dejected, boring, out of style, uncool, or weird. I really felt like I still could have anything I wanted. Put another way, I had maintained my happiness (I would say I was even happier now knowing I was saving money), while lowering my consumption.
How is that possible? I believe that happiness is not a product of consumption.
What was making me happy? I think the feeling of control over my money added to my happiness. Also, I knew I could still buy the things I wanted. I wasn’t feeling deprived–just in control.
Once you have gotten in the habit of writing down everything you spend, you’re ready to begin budgeting. And once you attain that step in mastering of your money the sky is the limit as far as your financial potential goes.
I challenge you to write down every single thing you spend. Your expenditures will drop–guaranteed. Write it down!