Create Spending Awareness

You probably give little thought to the amount of money you spend daily. A dollar on bottled water, $8 to $10 for lunch, and pretty soon, you’re out of cash and wondering where it all went. Try starting a spending log, and really look at where those dollars and cents are going.

A plain old pen and notebook work fine, though if you have a financial-planning program on your computer, it makes this even easier. Simply keep track of when, where and how much you spend for a week or so. At the end of this period, itemize your spending into a few main categories such as bills, food and entertainment. Then think about what items in each category are least important to you and where you can cut back. Do you really need a latte every morning? How about impulse buys at the drug store?

Debit cards have made it easier to buy, but also easier to lose track of cash flow. By becoming conscious of how much money you spend on things that you can do without, you’ll be able to see where you can begin saving. And face it—wouldn’t you rather spend what you’ve got on a great vacation or new home than on coffee?