Most of us assume we know what we are doing in regards to our finances. However, a few guidelines that reveal our real life situation would include the following: are we able to pay our bills on time, are we using multiple credit cards to keep up, and are we buying things on impulse: just to name a few.

Do you feel you deserve whatever it is that you NEED to buy? We can all rationalize what we want to do and postpone the inevitable bad results of our decisions.

One issue that can be a problem for some is the use of credit cards. I use two credit cards for all purposes and these are paid off in full at the end of each month. I am able to accumulate points that can be used for various purchases and airline tickets.

However, the use of credit cards can lead to unwise purchases if one does not utilize financial restraint. Using cash is much more conducive to financial restraint. You have to physically count out the money and it becomes very clear how much you are spending because it comes out of your wallet or purse.

One thing that I recommend to everyone and which I used to get control of my finances is to write down every purchase you make on a daily basis. I mean everything: coffee, newspaper, meals, groceries, etc.

Do this for three months and you will be surprised at where you money is going. Some people easily spend $200/month eating out without realizing it.  That’s a conservative figure.

My wife and I, on a monthly basis, use a spreadsheet to itemize all our expenditures in different categories. At the end of the year we total up our monthly totals and this provides us with an exact picture of where all of our finances went. We can then determine if we are out of balance in any category.

It might sound like a lot of work at the beginning but the payoff is tremendous!

Small changes in our habits will produce big benefits

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