The Compass to Your Financial Map

By Melissa TosettiWe’ve encountered a high volume of clients that have the habit of tracking their spending; but it’s not helping them because they’re missing the last vital step - to regularly review what they’ve tracked.Their spending has been captured, but the information that will tell them if they are on or off track is unused.  By taking a look at their information on a weekly basis, they have an opportunity to see if they’re staying within their Spending Plan or are off course.This simple habit, which takes just a few minutes a week, increases their probability of success exponentially!  Without it, even though the data is right there, they have no idea how they’re doing.  I like to think of Spending Plans as the map and Tracking as your compass.  You have to check your compass or you get lost.  It’s of no use if it sits in your pocket while you wander.In greater detail, the habit is to take five minutes a week and look at what you’ve spent in each of your spending categories, comparing it to what you have laid out in your Spending Plan.  If you overspent one week, you have a chance to spend a little less the next week and get back on track.  If you underspent, you have a chance to maybe go to a little nicer restaurant the next week or even capture that savings and put it toward your travel savings goal.  You can see how empowering this habit is for purposeful spending.One bit of advice I strongly recommend is to review what you’ve tracked first thing in the morning.  I’m the first to admit it’s one of those tasks that is easily procrastinated as the day wears on.If you are a part of a family, make sure both adults are reviewing the tracked information together.  As I outlined in a recent article - The Family CFO is Not the Bad Guy,  it’s unfortunately common for the person managing the family’s money to be perceived as The Bad Guy, The Money Police, The Buzz Killer – and that’s not fair!  It’s not fair especially given that their ultimate goal is to take care of the family and they’re getting chastised for it.The only way to counter this is for both adults involved in the family’s finances to schedule a regular time to meet and review their financial situation.  One member still manages the finances such as paying bills, but both adults review their status and make spending decisions.It may sound like a ridiculous idea to “schedule a family meeting”, but times have changed and the days of having just a few bills to manage are LONG over.  Our financial lives are complicated and need dedicated attention.I challenge you right now to set aside a regular time on your calendar to review your tracked spending.  For the first time, you may need about 10 minutes, but in the coming weeks, you’ll likely just need five. That’s five minutes in an entire week that can shift your spending, greatly increasing your quality of life along the way.________________________________________________________________________________________________________Melissa Tosetti is the founder of The Savvy Life and author of the international bestseller Living The Savvy Life. For the past eight years, she’s worked with over 525 individuals and families to create Spending Plans. Melissa also works with financial advisors and their clients doing cash flow planning as well as giving over 200 Savvy Living presentations via webinar and in-person to audiences across the U.S.If you’d like to learn more about how Melissa works with clients visit The Savvy Life’s Programs page.If you’d like to learn more about how Melissa works with financial advisors and their clients visit: The Savvy Life Advisor’s Page