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Two Simple Steps to Clean Your Finances

Apr 5, 2016

There’s no better way to alter your spending habits than to confront them head on. If you follow these two steps, you’ll be on a road to cleaning up your finances in no time:

There’s no better way to alter your spending habits than to confront them head on. If you follow these two steps, you’ll be on a road to cleaning up your finances in no time:

  1. Print out all of your credit card statements over the past six months.
  2. Now, take out different colored-highlighters and color code all of the following expenses.
    • Necessary Expenses: These expenses are typically the easiest to identify because you can’t live without them! Examples: electricity, health care, monthly loan payments on a car or home mortgage, and groceries.
    • Un-Regrettable Expenses: These expenses are ones that still make you feel great about having purchased, such as your monthly cable bill, a new suit for work, etc.
    • Potentially Regrettable Expenses: These expenses could range from buying a new pair of extravagant shoes to paying for a round of drinks at happy hour. Simply put, they’re purchases that might bring up some lingering feelings of buyer's remorse.

Sitting down and manually categorizing your expenses in this way is incredibly valuable for future spending habits. Sometimes we have to face the cold truth about our expenses so that the next time we got to pull out a credit or debit card, we can step back and think “is this worth it?” before making the purchase.

 

Ideas inspired from Real Simple

Link: http://www.realsimple.com/work-life/life-strategies/financial-organization