We are a familiar with the credit card advertising campaign that asks “What’s In Your Wallet?” This blog is about the other side of that question. What’s NOT In Your Wallet?” The answer may be a bit surprising . . .
The fact is that most of us enjoy spending on a nice meal at a restaurant, some new clothes for an upcoming event, or some tickets to a great concert or show. More often than not, that means using credit cards, as opposed to cash. And, while we are ready and willing to do the spending, few of us are aware of the real impact that credit card spending has on our budget.
According to a recent article in the Wall Street Journal, clients of financial advisors who were pressed to track their spending found that they were spending at levels as much as 20 percent higher than they thought. And, that same article refers to a survey done by the National Endowment for Financial Education, which found that 45 percent of adults in the U.S. are living from paycheck to paycheck.
“Credit card holders spend at levels as much as 20 percent higher than they thought.”
So, what is NOT is our wallet (or budget) is as much money as we want to think. We typically spend more than we want or expect – and that creates other financial issues for us in the future.
Tracking expenses is not what most of us would consider fun. It might be like counting calories. And, it might show us some things that we don’t want to address. But, like those who do count calories and make appropriate adjustments, tracking expenses can provide some valuable information and prompt some important choices and decisions.
For many people, it takes a major financial or life event to prompt real change. The stress of a situation like that can be avoided for those willing to take a few basic steps.
First, actually tracking your expenses is the right place to start. That means the unexpected lunches out, the number of lattes (how many this week?) and other items that can become routine, overlooked or excused. Having the information is the place to start.
As it happens, if you are using a debit or credit card, there are reports from your bank or the credit card companies that can help. And, of course, there are apps available to help, as well. (Spending Tracker, Goodbudget, and Budget Planner, to name a few).
Once you have the information, comparing it with your resources is the next step. Then you can consider what choices are best for you and, perhaps, for your family by developing a financial plan.
Even those who feel like they make enough to not worry about this sort of approach to financial matters will find it very helpful. It can impact decisions as important as retirement, timing of major purchases and even vacation planning. And, finally, it might even save a marriage.
So, take some time to make sure you know what is in your wallet – and what is not in your wallet. And, feel free to contact Price CPAs if some help with planning and related financial choices might be of value as you resolve to improve your financial picture . . . and have some money IN your wallet.