In a recent National Foundation for Credit Counseling (NFCC) poll, when choosing between marriage, health, job and personal finance categories, an overwhelming 80 percent of respondents indicated they typically make the worst decisions when it involves their personal finances.
“It is good sign that consumers recognize and admit their problem,” said Gail Cunningham, spokesperson for the NFCC. “Financial awareness often provides the motivation to jolt a person into taking action that can change the course of their financial life,” continued Cunningham.
Now is the time to do away with the habits that have contributed to poor financial choices. To get started, the NFCC suggests that consumers take the following steps toward increasing financial awareness:
- Face the financial facts. It’s impossible to know where money is going without tracking it. People avoid doing this, as they fear the reality of their spending will force them to make unpleasant changes. However, knowing where money is spent puts a person in control, allowing them to spend mindfully instead of mindlessly.
- Know how much is owed. This eye-opening exercise is a must. Once all debt is totaled, review the interest rates for each obligation. Next, total the dollar amount of interest paid each month, and consider how that money could be used if it weren’t going to service debt.
- Break the pattern of seemingly harmless financial habits. Little money adds up to be big money, so be conscious of incidental spending. Track the amount of money spent each day on items such as lottery tickets, vending machine snacks, cigarettes, and impulse purchases, as these are all budget busters.
- Determine if conveniences are worth the price. Eating out or purchasing prepared food at the grocery store, paying someone else to mow the lawn, wash the car, clean the house or do the taxes are all examples of tasks that merit a second look.
- Review bill statements to determine if the debt is worth it. Looking back at a month’s spending through the lens of hindsight can add a new perspective to future spending.