It’s never too late to start a New Year’s resolution. While I am confident that you are still sticking to the ones you made a month or so ago, I think now is the perfect time to start one more—better management of your personal finances. Sometimes I think that most people don’t understand the importance of tracking your own personal finances. It would be unheard of for a successful business or organization to ignore their finances. But for some reason it is so easy to ignore our own. Maybe we are afraid of what we may find. Maybe we will realize how much we are really spending eating out every day, or how little we are saving for retirement. Some have the idea that as long as the online bank balance is still in the black the last few days leading up to the next paycheck—that they are “o.k.”. The scary part is that we probably won’t realize we are in trouble until it’s too late.
Budgeting and tracking your personal finances should be one of your top priorities. And I think it is even more important for the younger generations. We have been characterized by overwhelming amounts of student loan debt, and the uncertainty of any sort of government-aided retirement benefits. How we manage our finances now (or the lack thereof) is going to have huge impacts thirty or forty years down the road—and it’s hard to make up for lost time. That is why I think there is no better time than now to start tracking your finances. Here are some ideas that may help you get started, or possibly improve your current personal finance routine.
My wife and I rarely use cash anymore, and you will never find me with my checkbook. The convenience of credit and debit cards has spoiled us. I’m even sometimes embarrassed swiping my card for a measly $.99 purchase. But the trade-off is that it has made it much easier to track our expenses. Since 99% of our expenses are paid by 1 or 2 credit cards, all of our expenses are already summarized for us at the end of the month. We don’t have to keep track of our receipts or remember how much we spent at dinner the other night—it is already done for us. Plus, we get cash-back rewards on most of our purchases!
However, while my wife and I are comfortable putting the majority of our purchases on credit cards, it may take getting used to for some. We don’t use the credit cards to spend beyond our means. We treat each credit card purchase as if we were using cash—we don’t use them as “credit”. And since we always pay off the balance every month and have no annual fees, we aren’t paying any extra for doing it this way. So while this may not work for everyone, it can be a very good personal finance management tool if used with caution.