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How (And Why) You Should Evaluate Your Current Spending

Embracing a budget is one of the smartest things you can do for your financial health. Spending less than you earn or living within your means is the objective, but a keeping a handle on your expenses is also good for your physical health. According to a 2017 study, 46 percent of employees admit that financial issues are the most stressful of all. And science has shown us how stress can cause any number of health problems, including migraines, ulcers and insomnia.

If improving your financial health has a positive effect on your physical well-being, why don’t more people embrace the budget lifestyle? According to a Gallup poll, only 32% of Americans maintain a household budget, while only 30% have long-term savings and investment goals. What’s more, about half of U.S. households live paycheck to paycheck. It turns out that we aren’t that great at saving or budgeting or financial planning, but we’re experts at spending.

With a new year, however, come new opportunities to re-evaluate, rethink and redo. Before you dive into scrimping and cutting, make a list of your financial priorities. This can help you craft a sensible budget that works for you and makes you happy, and increases the odds that you’ll successfully stick with it. But first, ask yourself some basic questions that address the how and why of your current spending habits and future goals. Here are four things to keep in mind.

ASK YOURSELF WHY YOU WANT TO BUDGET.

Most of us know that we should budget because it’s financially responsible. But the “why” of budgeting – reasons behind your decision to set a budget for yourself – can make it easier to stay focused, make sacrifices and stick to your plan.

SET SOME SHORT-TERM BUDGET GOALS.

Sure, conventional wisdom dictates that you plan for those big-picture, long-term goals like buying a house, having kids or retiring. But goals that you can reach in a year or two (or less) can be easier to achieve and give you the motivation to keep saving and budgeting. Start an emergency fund. Pay off a credit card (Just one, not all of them). Set aside money for an amazing vacation. Achieving short-term goals will give you to the confidence to keep going.

KNOW HOW MUCH YOU MAKE.

This isn’t just about your salary. It’s about how much you bring home every month. Do you have any money-making side gigs? Stock dividends? Investment royalties? All of these things add up, but only after taxes. Knowing exactly what you make is the framework for creating your budget.

KEEP TRACK OF WHAT YOU SPEND.

Tracking your spending is the best way to understand how much money is going out every week or month. Hobbies, groceries, travel, transportation, even mocha lattes, all add up at the cash register. How can you stay on top of things? You can always tackle your spending by creating a personal spreadsheet. But if you cringe at the thought of keeping every receipt, there’s a world of budgeting and tracking apps like PocketGuard, Mint, Wally and Clarity Money to help keep you on the financial straight and narrow. If you need extra support beyond an app, consider finding a budget buddy or reaching out to a financial advisor that can help keep you on track and provide you with even more resources.

It’s hard to understate the importance of knowing how much you spend every week or month or year. Fewer than half of all Americans know what they spend their money on. Figuring out how much money you have and where it’s going is the first critical step toward creating a budget you can live with and ensuring your healthy financial future.

This article was written and licensed from NewsCred, Inc. Santander Bank does not provide financial, tax or legal advice and the information contained in this article does not constitute tax, legal or financial advice. Santander Bank does not provide financial, tax or legal advice and the information contained in this article does not constitute tax, legal or financial advice. Santander Bank does not make any claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in this article. Readers should consult their own attorneys or other tax advisors regarding any financial strategies mentioned in this article. These materials are for informational purposes only and do not necessarily reflect the views or endorsement of Santander Bank.
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