30 Days to Financial Knowledge

If you have debt, it’s essential to discover whether you spend more money than you bring in each month. If you’re free of debt, and would like to create or add to your investment portfolio, it’s essential to know how much more you bring in monthly than you spend. In either case, this much is certain: recording your expenses for 30 days is the first step of the journey to financial enlightenment.

Congratulations…you’re about to go from unconsciousness to consciousness. We all need help along the way--Dorothy had the Scarecrow, the Tin Man, the Lion and Toto. You’ll need your mind vigilant, your heart compassionate (without judging your spending), and your spirit courageous (to discover your financial Truth). Another pair of allies are a notebook (or pad) and pen. Think of them the way you might have once thought about your American Express Card…don’t leave home without it.

If you bought a newspaper, write it down. Just got a half caf, half decaf latte at Starbuck’s? Mark it in your book. The kids just got a candy bar? Record it. Do this for a month. A big reason people have debt is that they don’t want to know how much they spend, so they’d rather head for the hills than record every purchase for 30 days. So stay vigilant. By day 4 the impulse to go unconscious—what we call “forgetting”—will raise its ugly head. Dorothy fell asleep in the poppy fields. The impulse to go unconscious is so insidious that you’ll probably “forget” before even knowing you have.
One other thing: you’re noting your purchases, not judging them. It’s not necessary to change spending habits during the month you observe them. At month’s end, after you’ve gone over the numbers, you can decide how to change your spending patterns.

This recordkeeping month is your Money Yoga, your Zen of Finances, and parallels the lunar cycle. There’s spiritual significance to accounting for your spending; you’re becoming conscious of what was mostly unconscious. Each day review the spending of your daily bread, and make sure you’ve covered each expense. To offset the impulse to sleep, consider rewarding yourself each day you stay conscious—it needn’t cost a penny. Take a walk by the ocean, listen to music by candlelight, relax into a hot bath.

After 30 days, review a year’s credit card and checking statements for unusual or seasonal expenses that didn’t show up in your monthly vigil. This vital process discovers what it costs for vacations, insurance premiums, holiday gifts, birthday presents, etc. For expenses that show up once a year, divide by 12 and assign an appropriate monthly number. If they appear twice a year, divide by 6. If they happen every other year, divide by 24.

When the numbers are tabulated, lift your spirits before sharpening your pencil or downloading your Quicken software. Meditate or take a walk by the Atlantic, then put your expenses into categories and make appropriate decisions about how you want to spend or invest your money.