We tend to have blind spots when it comes to our spending habits. For some people, it may be paint or craft supplies. For others, it may be eating out or coffee runs. Some people spend on clothes, tools, antique shopping, etc. This is another reason for us to review our expenses regularly. It gives us insight into how we unconsciously spend our money. For anyone needing to complete an expense inventory, check out Take an expense inventory.
The question we then need to ask ourselves is: Am I spending my money in a way that supports my wealth definition?
If our spending habits don’t align with our wealth definition, we need to rethink those habits, identify ways to change them and implement those changes. Comparing our spending to our wealth definition makes us more likely to stay on track. Some people may only have to do this exercise annually, like taking an expense inventory, while others may want to do it more frequently. We need to experiment to find out what benefits us the most. Start by doing this exercise every time you do an expense inventory. Then adjust as needed.
Action steps:
- Review your expense inventory and identify where your spending your money.
- Identify how much money is spent in each category.
- Determine which categories align with your wealth definition.
- Determine the categories that don’t align with your wealth definition where you’re spending money.
- Decide if the amount of money being spent in categories that don’t align with your wealth definition need to be eliminated or reduced.
- Brainstorm ways to eliminate or reduce spending and how you’ll monitor your progress.
- Put the changes into action.