Being Honest With Yourself About Money

Wed, Aug 18, 2010

Budgeting, Financial Advice

The complex nature of today’s financial world can make it easy to get lost in fantasy and not understand the financial realities we face. Credit cards allow us to accumulate purchases and seemingly only have to pay a small portion at the end of the month. A lack of savings does not seem like a problem until an emergency comes or retirement approaches. These are examples of how people continue bad habits and do not realize or admit their financial problems. To make sure you are being honest with yourself about money, consider these techniques.

Put Everything Into Numbers. If you know you have a spending problem, setting a firm budget to control it is very black and white. You either come in over or under budget for each category of spending, and there is no fudging involved.

Make Yourself Accountable to Others. Pick the friends you are the most honest with and that you trust will call you out on breaking your rules. If you tell them, for example, that you want to spend less on clothing, they will confront you when you show up with a new outfit.

Tally Your Own Statements. Whether it is balancing your checkbook or adding up your credit card expenses, do not just rely on your bank to do it for you online or in a convenient statement. Look at your starting and ending balances, with every single expense in between, and it will be hard to justify the things that should not be there.

Whether these methods work for you or you find something else more suitable, the idea is that you should be in the practice of regularly facing your financial reality. It can be painful when there is large debt and expenses involved, but moving away from pain can be just as strong a motivator as moving towards pleasure. It is a matter of doing what is necessary to reach your financial goals.

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