Where's All Your Money Going?
I understand how it feels to be 50 and just realizing you have been living life with no financial plan. You’ve been doing what most people around you have been doing- moneywise. On paper, things should add up, but somehow in real life they never do. Where are things going wrong? Where’s all your money going?
Ton answer those questions, up until last year, I would have counseled you to do what I did back in 2017. I would have counselled you to write down all your bills to see how much you are spending and compare that to your income. But last year I learned from Dr. Lynn Richardson (of New W.E.A.L.T.H. University), a game changing move. Look at your bank statements.
I recommend you look at all your bank statements and credit card statements for the last 60 days at least. If you have a couple of account, this should be fairly easy. For someone like me, who has 3 banks, and 10 accounts, it will be challenging and time consuming—but well worth it.
Why do I recommend this task? Writing down your bills on a piece of paper won’t tell you the truth about your spending. That piece of paper only represents what you think you’re spending money on. It doesn’t show you how many times you went to the ATM, withdrew what amounts, and for what purposes. It won’t show you how many times you stopped at the market, the local convenience store, fast-food restaurants and more. It won’t show you how much is truly
going out, to where, and for what. Your bank and credit card statements will tell the truth. They will reveal whether you are among those of us who have a spending addiction.
Dr. Lynn recommends transcribing every line item into an Excel spreadsheet and categorizing it. That way, you can see how much you are spending in various categories (food, entertainment, clothes, etc.) It took me about 10 hours over the course of 3 weekends, to finish this process.
Alternatively, I think you can gather hardcopies of all your statements and several color highlighters. Designate a color for each major category (housing, transportation, insurance, food, clothing, entertainment, miscellaneous, etc.) Then add up each category and write those numbers down. Everything on your statements should be accounted for. I learned so much about myself when I traced my spending for the entire year 2020. I think you’ll learn about yourself, too.
Conclusion:
If there is only one thing, I could counsel you to do prior to beginning any financial recovery plan, it would be to do the above exercise. Look at all your bank and credit card statements for 2 months, up to a full year. Add up all those transactions, label, and write them on a clean sheet of paper.
Look at and pray about all the areas of waste. If you’re like me, there are thousands of dollars that you have nothing to show for- because we ate it, played with it, gave it away, or otherwise wasted it. Feel some kind of way about it and then ask what, if anything, you are going to do about it.
