Billion dollar crypto/NFT scams and inflation aren’t the only thing making money vanish. In fact, the real culprits of disappearing money probably live closer to home, staring us right in the mirror. In a study by Intuit, 65 percent of Americans said they don’t know how much they spent last month.
Why your money is disappearing and how getting clarity around your money can help
If you’re like most people, you probably have no idea where your money goes each month. You know roughly how much you make and how much your bills cost, but when it comes to your day-to-day spending, it’s all a bit of a mystery.
This lack of clarity around our finances is one of the main reasons why 59% of Americans live paycheck to paycheck.
Getting clarity around your finances is the first step to regaining control of your money. When you know where your money is going, it’s easier to make sure that it’s being spent in a way that’s right for you and your financial goals.
What is clarity around your finances?
Clarity around our finances means having a clear understanding of where money is going. It means knowing how much money you have coming in, and how much we have going out. It also means having a plan with steps for achieving your goals.
The first step to getting a handle on your finances is to get clarity around where your money is actually going.
Tracking Your Spending to Get More Financial Clarity
If you’re not tracking your spending, it’s tough to get clarity around your finances.
Perks of tracking your spending
Tracking your spending can help you in a few different ways. First, it can help you identify and realize what you’re actually spending your money. If you see that you’re spending a lot of money on dining out when you would rather save for travel, for example, you may want to cut back on dining out so you can save more money.
Second, tracking your spending can help you set better financial goals. If you’re trying to save up for a down payment on a house, for example, you’ll need to have a good understanding of your spending so you can figure out how much you need to save each month.
Finally, tracking your spending can help you feel better about your money. Avoiding your bank account balances can lead to financial anxiety and stress, especially with surprise bills like random subscription fees.
But when you track your spending, you can see exactly where your money is going. This gives you clarity around your finances, and that can help you make better choices about how to spend your money.
Steps to tracking your spending
- Figure out your why. Why do you want to track your spending? What are your goals? Having clarity around this will help keep you motivated when things get tough.
- Set some ground rules. What are you going to track? Every single purchase? Just your major expenses? Your bills? Once you know what you’re tracking, stick to it!
- Make a plan. You need a method for tracking your spending. Whether it’s pen and paper or a money tracking app like Nav.it, you need a system for tracking it. Then decide how frequently you want to track your spending.
- Review your progress regularly.
- Keep at it! The more consistent you are with tracking your spending, the more helpful it will be.
Once you’ve tracked your expenses for a month, you’ve got a good baseline for understanding where your money is going. Now it’s time to make a spending plan.
Creating a spending plan for increased clarity with your money
There are a few different ways to approach a spending plan, but the goals are always the same: increase your financial clarity and make sure your income is greater than your expenses. This way, you can save money and reach your financial goals.
To start, you’ll need to gather your financial information. This includes your income, debts, expenses, and savings. Once you have all of this information, you can create a budget.
Not into budgeting? Try a money tracking app like Nav.it that makes getting clarity with your money easy. You’ll import your transactions into a customizable budget once you connect to Plaid.
-Next, create a budget that reflects your spending patterns. Make sure to account for both fixed (rent, health insurance, etc.) and variable expenses (food, travel, fun).
–Set realistic goals for yourself. Trying to save too much too soon will only lead to frustration.
-Be flexible with your budget. Life happens, and sometimes you have to adjust your spending accordingly.
-Review your budget regularly to make sure you’re on track and make steps if you’ve fallen off track financially.
If you’re not sure how to create a budget, there are plenty of resources available online or you can speak to a financial advisor.
Once you have a budget in place, make sure you stick to it. This can be difficult, but it’s important to stay on track if you want to get your finances under control.
Managing your feelings when it comes to money
Once you realize where your money is going and make a plan for it, you may still find yourself struggling. After all, of those who do know their previous month’s spending, 31% say they regret how much they spent.
When it comes to money, our emotions can often get the best of us. We might overspend when we’re feeling happy or down, and we might make rash decisions that we later regret.
It’s important to be aware of how your feelings can impact your spending, and to take steps to manage them in a healthy way. Here are some tips:
– Try not to let your feelings dictate your spending. If you’re feeling down, don’t try to cheer yourself up with a shopping spree.
-If you’re feeling happy, don’t let that lead to overspending either. Practicing mindfulness helps you tune into how you feel so you can avoid overspending.
– Seek professional help if you need it. If you’re struggling to manage your money, there’s no shame in seeking professional help. A money coach or financial therapist can help you get on track and make a plan for your future.
The root cause of your lack of financial clarity: your relationship with money.
If you’re like most people, you probably have a complicated relationship with money. You may have tried budgeting or stuffing cash envelopes in the past, but you always fell off the wagon.
On the one hand, you want to be responsible and save for your future. On the other hand, you also want to enjoy your life and spend money on things that make you happy. But often, unconscious things get in our way.
Here are a few tips to help you improve your relationship with money:
1. Talk about money with your partner or spouse.
Money is one of the most taboo subjects in our society. We’re taught from a young age not to talk about money, and as a result, many of us grow up feeling uncomfortable discussing our finances.
If you’re in a relationship, it’s important to have regular conversations about money with your partner. This will help you understand each other’s financial goals and make joint decisions about spending and saving. It also might help you process how your past may be influencing how you manage money now and why you may have had a period that lacked financial clarity.
2. Invest in yourself.
One of the best things you can do for your financial future is to invest in yourself. This could mean taking courses or attending workshops to improve your skills, investing in a solid financial education, hiring a money coach, or even just reading books about money.
When you invest in yourself, you’re making a commitment to your future success. And that’s something that will pay off big time in the long run.
3. Live below your means.
One of the quickest ways to get into debt is to spend more money than you have coming in. If you want to improve your relationship with money, it’s important to live below your means. That doesn’t mean you have to deprive yourself – but it does mean being mindful of your spending and making choices that are in line with your long-term financial goals.
Pro-tip: there are tons of apps that can support you living living below your means and more mindfully on a day-to-day basis.
4. Automate your finances.
One of the best ways to stay on top of your money and improve your financial clarity is to automate it. Set up automatic payments for your bills and savings so you don’t have to think about it. This will help you stay on track and ensure that your finances are always in order.
There are a few reasons why people feel like their money is slipping through their fingers. First, there’s the issue of clarity. When you don’t have a clear picture of your finances, it’s easy to feel like you’re not in control. Second, people often spend money without thinking about it. This can happen when you use credit cards or when you impulsively buy things. Lastly, many people don’t have a plan, so they don’t know where their money is going.
How a money coach can help you increase your financial clarity
If this all feels a little bit challenging, try reaching out to a money coach. A money coach can help you find clarity around your finances by providing expert insights and navigate financial tools. They can also help you understand your spending patterns, develop a budget that works for you, and identify opportunities to save money. Lastly, they can also provide support and accountability to ensure that you stay on track.
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