I think the biggest barrier for people trying to improve their finances is getting started. We may start and get halfway done on a budget only to then quit following it within the next two weeks.

The key to coming up with a plan that works for many people is making it easy to do and even easier to maintain. Here are some steps you might want to consider:

1. Simplify your accounts. Clever Dude had 10 accounts and he’s slowly consolidating them to make it easier for him to track. If you have several accounts lying around, see if you can reduce it. It’ll save you time from trying to remember what goes where and you can qualify for better rates if you balances are higher.
2. Track your actual spending. Unless you follow your budget to the T, then get online with your bank and download/print last month’s statement. Add up the different categories or use some money management software to automate it. See what your biggest expenses are.
3. Pick 1-2 areas to work on for the next month. Don’t try to ‘fix’ everything at once. Build some momentum by working on one or two areas of your budget. My suggestions are eating out and movie tickets/rents. These are two unnecessary expenses. Put a note in your wallet about your goal for the month. It’ll be a reminder to cut back.
4. Only try to reduce those areas, don’t just cut them out completely. You don’t have to abstain from these activities, but be choosier with the expenses. Do you have to eat out every day? Can you have leftovers for lunch twice a week? It’s better to start somewhere then plan everything.
5. Keep your receipts in a small pile on your desk. If you keep it in the car or at work, you’re less likely to check what you’re spending. Keep it by your home computer. It takes less than 5 minutes if you do it 3 times a week. Remember if it’s easy to do, then you’re more likely to do it. (Not guaranteed because of the laziness factor of some people.)
6. Repeat steps 2-5 for the next area. Now that you’re working at it and seen it work, then move on to another area you feel you can improve. It’s an ongoing process, but if you chip at it, then it’s much easier.

What gives you a hard time when working on your finances? What part of your spending was easiest to cut down on? What expense was the hardest?

Photo Credit: Aaron Jacobs

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