The Power of Awareness

I worked for a few years as a manager for a well-known, industry-leading company. One of the things I learned from them was that awareness increases performance. Simply checking in on yourself and asking how you are doing, are you on track to meet your goals, etc is essential to success. I am a nerd and enjoy checking in on it, so I monitor my bank accounts, budget, goals, trends, etc on a daily basis. For a normal, non-nerd person (although I believe we are all nerds at heart, just on different topics) I would recommend at least once or twice a week.

A couple of benefits come from checking in often on your finances. The ones on the top of my head are

1. You can't stay in your budgets if you aren't aware of how much you have left. Budgets aren't just things you set in the beginning of the month and feel guilty about blowing at the end of the month. If you know where you're at you're more likely to stay within the boundaries you set and make your goal. 
2. Seeing yourself succeeding is motivating. We like to see when we are doing well and checking in on yourself is the only way to see that.
3. It's easier to remember the recent past than distant. Marking transactions into appropriate categories can be difficult if the only label from your bank isn't helpful. For example, I had a transaction labeled "Bozotronics" from the bank. What?  Never heard of them. But then I looked at the amount and realized it was payment for a parking spot that happened to be next to a company called Bozotronics. How I would have come up with that even a week later I wouldn't know, but since I looked right away it was easier to remember and categorize it. 
4. Preventing identity theft.  Checking your accounts daily means you will catch other people stealing your money quickly, hopefully before something drastic happens. Someone once told me that the thieves usually buy a couple little things so your bank doesn't suspect anything. For example, if you live in Montana and all of a sudden there's a $5,000 transaction in London, it's pretty obvious to the bank that its fraud. However, if there's a $20 transaction and then a $40 transaction, and then a $100 transaction, and THEN the $5,000 one hits, its less likely that they'd catch it for you. 
5. Last but not least, to protect you from yourself. I have also worked for an online company who sold subscriptions to their site. Each subscription came with an automatic renewal at a lower rate as a perk. Sound familiar?  You've probably seen something like this somewhere, whether you have done online gaming, online dating, online movie subscriptions, gym memberships, magazine subscriptions, etc. The catch is if you FORGET you signed up for these things, THEY WILL CHARGE YOU FOREVER. It's not that there's a mean lady punching a button to charge your account every month, its that its AUTOMATIC, so it will keep going until you tell them to stop. So don't call their call center and yell at them for charging you (pretty please, been there, done that!). Instead check your accounts so you notice the first month they charge you and can call and cancel it if you don't want it. I had people call me wondering what the charge was on their account, only to find out we had been charging them for YEARS! Even if you dispute charges, most credit cards will only work with charges for the last 3-6 months depending on the card. Not to rant, but check your accounts people. Really.

Now, the EASIER this piece is, the more likely you are to do it. Yes?  Yes. Ok.  So I'm going to tell you how I do it (because its my blog, muahahaha) and if you decide to paper/pencil it or use a different software, etc, it's ok. As long as you actually do it. 

I heart Mint.com. I know, I'm a nerd. Don't judge until you try it. Free, easy, simple.  It compiles all your budgets, account information, goals, etc. to give you a financial dashboard you can quickly and easily read. It's mobile so you can know your budgets on the goal. It remembers when you categorize things so you don't have to categorize everything (double heart on that one). All you have to do is log in, check your recent transactions and label the ones that it didn't know, glance at your budget (which it shows you how much of your budget you've spent relative to how far through the month you are), check your goals, and out!  5 minutes and you know where you stand. Boom. 

Now we all have pet budgets that we like to blow. For some its Fast Food or Groceries. For others its Clothing, Entertainment, or Technology. Whatever your most-blown budget is I recommend using cash for. For you Dave Ramsey fans, you are familiar with how this works (confession: I'm a Ramsey addict). Basically it works like this: you withdraw the money you've budgeted for that category and carry it in an envelope marked "clothing" or whatever. You spend money on clothing from the envelope. When the money is gone, you can't spend anymore. This is great because you are very aware of your budget. Everyone hates getting to the register and realizing you don't have enough to cover it. It is sufficiently embarrassing that you don't overspend. Boom. Problem solved. It's also nice because the money doesn't disappear if you don't spend it. It's right there, waiting for whatever you find next month that you need a little extra for.  I highly recommend using cash for your splurge money/spending money/blow money, whatever you call it. Pull it out at the beginning of the month and then you can use it on WHATEVER YOU WANT, but you won't overspend. This category by nature tends to be easy to blow, hence the name, so plan on it!