Heres a little exercise for you to try out.
Take out your latest credit card bill from your most frequently used credit card.
This post originally appeared onThe Simple Dollar.
Now, go through each item and ask yourself a couple of simple questions about each one.
Was this thing a necessary purchase?
If it is, put a little + beside that item on your bill.
Easy enoughthese expenses should be obvious.
Was this purchase not necessary, but actually really fulfilling when I look back on it?
Just leave it blank.
Dont mark anything beside it.
Was this purchase not necessary, but not really all that great when I look back on it?
Put a beside that item.
I dont remember what this item was at all, but Im pretty sure it wasnt important.
Put a beside that item.
That money could have been used to pay down debts.
It could have been used to save up for a down payment on a home or on a car.
It could have been used to save for retirement through a Roth IRA contribution.
Those things quickly turn a into a +.
Those things move, at the very least, into the neutral column.
This exercise isnt meant for you to beat up on yourself.The truth is thateveryonemakes spending mistakes.
The real purpose of this exercise is twofold.
Itshows youhow much of your spending is forgettable and low-impact.
It even shows you exactly what those expenses are.
you’re free to take that information and use it to improve your spending habits going forward.
Heres how you’ve got the option to use that information to really reshape your spending.
First,look for patterns in the data.
Where do you often spend money in a forgettable fashion?
Is it at a bar?
Are there particular kinds of products that you often buy that you just forget about?
What are you going to do about those things?
This can be a hard thing to do, so here are a few suggestions on making them click.
Second,focus just on today.Dont worry about the failures of the past or the path ahead of you.
Just worry about making sure you take care of those thingstoday.
Today is what matters.
Did you manage to avoid drinking?
If you didnt, why did that happen?
To keep myself motivated, I use the success chain system.
I have a white board in my office where I have my top two or three daily goals listed.
Next to each goal is a line of Xs.
Each day, when Ive successfully done that thing, I add an X to that line.
If I havent successfully done that thing, I erase thewhole line.
Use these strategies together to implement the changes you identified and actually cut that needless spending from your life.
Go through it and do the same +, , and - exercise described above.
Since its spending that really doesnt matter to you, its easy to keep it going.
Personal finance change is no different.
Give this little technique a shot.
Youll be pretty happy with the changes it brings.
