Wednesday, December 18, 2013

What Are Your Spending Habits? A hands-on activity to SHOW you what you're really spending

"And I'm off!!"  I have been writing curriculum like a crazy person for my Financial Basics, Advanced Finances, & Life Management Skills classes.  It's all looking like an English Course Composition Paper with scribbles, notes on the sides where I want to add things in, messy handwriting, questions, answers, info, etc. etc. etc.  I love the process of creating.  I get to research, interview, reflect on past experiences, read, read, read, and get my thoughts onto paper.

One of the things I love to do, when writing a curriculum is think of the visual aids, hands-on experiences, and stories to share that will bring the information together, and hopefully bring an "Ah hah" moment to someone.  I am a very strong believer in trying to implement all the different learning styles into my teaching, so it is very important to me to incorporate these.  It can be a difficult task, because sometimes, there just isn't a way to make a subject more interesting.  Sometimes, it's just hard truth, and/or it's just tedious.  None the less, I still always try.
Anyways, I have come up with a few aids & activities, and am excited to share them.  This one has to do with telling your money "where it needs to go," and discovering the reality that it doesn't already do that.  We all have an idea of where we think our money should go, and then we make up a "budget" and say, "We're going to only spend $300 on food this month, and we're not eating out!"  The problem is, you didn't really account for where your money is going.  You also didn't do an assessment of your spending HABITS!!  The word HABIT comes from the Latin, HABITO, which literally means TO LIVE.  A HABIT IS "HOW YOU LIVE."  These are the things you HAVE been doing.  If you don't take a look at the REALITY of how you have been living, and don't set up a realistic plan, you are setting yourself up for failure, my friend. 
So, I came up with this activity. It’s not really a new, renovative thing.  I have been told many times, when struggling with finances, or in financial classes to do this very thing.  I have simply created a method for it over the years in helping others through their finances.  Here it is:
You Will Need:
Your Check Registry OR at least One Month print out of your Bank Statements
A separate piece of paper
A pen
Your Brain J

 (Please know that your categories will go in a different order than mine.  Don’t lie to yourself; be honest about what you are doing.  This is to help you.  Restaurants are separate from the food category. Netflix and Hulu are entertainment, not utilities.  And going out to the bar and buying a drink does not fit into the FOOD category either :-)

What you want to do, is start at the top of your statement, and look at the first line item.
For example: Rent Check
Mark it with a small #1.  On the separate piece of paper, write: 1-rent.

Go to the next line item. 
For Example:  Winco Foods
Mark it with a small #2.  On the separate piece of paper, write: 2-food.

Next line item.
Example: Pier One Imports
Mark it with a small #3.  Separate paper, write: 3-shopping

Next line. 
Example: Taco Bell
Mark it with a small #4.  Separate paper, write: 4-restaurants

Next line.
Example: Electricity Bill
Mark it with a small #5. Separate paper, write: 5-utilities

Continue down each line item. Write a NEW number for each NEW category.  Eventually, you will start to see repeat categories.  You don’t need to make a new number, if an item fits into a category you already wrote down.

For example:  Phone, electricity, gas, trash, etc. all fall into the utilities category, and can be marked with a little 5 next to them.  You don’t need to create a new category for each of those. 

It seems like a slow process when you first begin, but I promise as you get your categories established, and you continue down the list, you will see patterns, and be able to mark each line item pretty quickly. 

Once you’ve finished this step, I bet you will already be seeing some strong habits.  This is not to calculate your percentage of what you’re spending-yet.  We just want to see which activities you engage in the most.

Now is where we see the BIG REALITY.  Brace yourselves. You probably already caught on a bit, when you were seeing the pattern in the numbers.  We really have to bring it home though.

Go back to the top of your Registry or Print Out.  Tally the number of numbers J That sounds weird, I know.  So, if you have a 2 in your first line item, put a tally mark next to 2-food on the separate sheet of paper.  If the next line item is a 4, put a tally next to 4-restaurants on the other piece of paper, and keep going until you have tallied them all.

Look at your data.  There are some questions you’re going to want to think about:

·         Which activities are you doing more of? Which ones are out of balance?
·         Which activities do you need to do less of? Or more of?
·         What ARE YOUR Spending Habits?

Now that you have completed this activity, you truly have a better handle on what is going on with your finances, and you’re not just guessing.  Remember to have GRACE, when learning these truths.  Also, make sure to consider your current circumstances.  When I did this activity in my registry last night, I had 15 tallies under shopping, and I don’t mean grocery shopping-we’re talking World Market, Pier One, JoAnne’s, and other stores.  Normally, this would be WAAAAAAAYYYY out of balance; however, it is Christmas time, and not only was I shopping for my own family, but I was also purchasing items to make Christmas Baskets for my hubby’s employer.  Since I rarely use my Debit Card, it was easier to do all these purchases through our account, than to have another envelope to haul around, not to mention a ton of cash to be carrying.  Eeek.  The thought of anything happening to that really scared me.  So, in this case, the shopping made sense.

Alright, hopefully your brain is not fried, and hopefully this was a helpful activity for you to really SEE what you’re doing.  I pray that you will be able to take this information, and move forward.  That you’ll give yourself GRACE through this process of discovery and growth. 

(You may be perfectly happy with doing this activity, and that’s great!!  I however, like to take numbers and data like this as far as I can.  So, there are things you can do with this information to take this to the next step, if you wish. You could write down the Dollar amounts in each category, add them up, and then find out what percentage of your income each of these categories is.  Then, you can compare it with the percentages of a financial expert, like Dave Ramsey to see if you think you need to make changes to your budget.  I will probably do this, just because I’m a nerd, and proud of it.  I love numbers J)

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