We all own at least one pair of pants that we should like, but don’t. They don’t look quite right. They don’t fit quite right. When we wear them we’re hyper aware of the fact that we’re wearing these pants and we do not really like these pants, try as we might.
Ultimately, those pants end up in the back of the closet or at the very bottom of the bottommost drawer. There’s nothing wrong with the pants, but they just aren’t right, and we ignore them as a result.
So it goes with money management. We pick a money management style (or have one forced on us) and it doesn’t fit. Every time we attempt to budget or plan or simply think about money, it feels uncomfortable. So we stop. We put our financial planning in the back of the closet and only pull it out when someone asks about it or we start to feel guilty.
Well, it’s time to give those pants away.
Your parents’ style may not be your style
First, ask yourself how you think you should be managing your money. When you close your eyes and think about “good money management” what does it look like?
We often develop preconceived notions of how we should behave. Most people have some sort of preconceived idea of who they should be when it comes to money. That may have come from how your parents handled their money or from somewhere else entirely. Where it came from doesn’t necessarily matter. What matters is whether or not that style is right for you.
As a rule of thumb, if you know what you “should” do and you never do it anyway, you almost definitely picked the wrong style.
Finding your style
Just like a successful savings strategy, your money management style needs to be an extension of your routine, not a disruption. To begin finding the method that fits best, you first need to do a little thinking about who you really are (financially, at least). Start the process by considering the following questions:
- Does “seeing” your money change how you spend your money?
- Are you technologically savvy?
- Do you find visual reminders helpful?
- Would you rather work on a task briefly every day, or less frequently, but for longer periods of time?
- Do you feel comfortable allowing third parties to access your financial information?
- Do you prefer planning future events or analyzing past ones?
Think about the things you do well – the tasks, chores, and activities that feel comfortable. Are there any unifying characteristics? What potentially disruptive activities – cleaning, exercising, caring for your pets – have you managed to successfully integrate into your routine?
A rainbow of options
I can’t tell you how to build money management into your routine. However, if you struggle with your vision of financial planning, now’s the time to start trying on some different money management pants to see how they fit.
Start a spending journal – This is a very basic, foundational approach to building your money awareness. Simply keep a real time log of every expense you incur. Every time you spend money, write it down.
Initially, the value of this is to help you build a sense of accountability. You spend money, you stop, you take out your journal, and you write it down. It’s a small step that makes you pause and consider the very real money that is leaving your possession every time you make a purchase.
There are countless ways to build from this premise. You can use the journal to review your spending daily, weekly, or monthly to get a sense of your habits (good, bad, and otherwise). You can use it to help verify bank statements. You can even add income to the data, giving you a slightly more tactile connection to the rise and fall of your account balances.
Create a spreadsheet – The beauty of using a spreadsheet to help track and steer your financial decision-making, is that spreadsheets can be as simple or complex as you need. In its most basic format, you can use a budgeting spreadsheet to set spending goals and track that against your actual spending, letting you see – in cold, hard numbers – where you’re succeeding, where you’re failing, and where you need to cut back.
But spreadsheets can be much more comprehensive. You can use them to set goals and chart your progress. They can also help you visualize the connection between small changes and their potential long-term impact, giving you real incentive to make those changes.
And because spreadsheets are so malleable you can determine what information is valuable to you and how much time you’re willing to spend getting that information. To start you off with spreadsheets, here are some solid budgeting templates to try out.
Using an app – Technology is such that you can now automate a good portion of the financial planning process by finding the right program or app for you. Money apps come with a wide range of features, but they’re all generally designed with the same primary purpose – to help you streamline or completely bypass whatever element of the money management process that’s holding you back.
An app like MoneyStream, for example, analyzes your past spending and provides you with a forecast of your likely future spending. It projects your cash flow weeks and months in advance to help plan your spending, pay your bills on time, and understand how today’s spending will impact you and your goals months down the road.
Every app, however, caters to a slightly different financial blindspot. Mint, Pocket Expense, Expensify, Bill Guard, and all the other widely available money apps can potentially help you, depending on your money management needs and wants.
Create a style all your own
Those are just some of the tools you can use to manage your spending and start building towards financial goals. Experiment and see what feels right. Your money management style will be completely unique to you. The only requirement is that it helps you get where you want to go.
In the beginning, it might take some time and some discomfort to find something that works, but once you’ve settled on a method that looks good on you, you’ll want to wear it every day.