If you feel unsure about where your money is going, you’re not alone. In fact, many people acknowledge that they frequently underestimate how much money they spend in a week.
It’s a common mistake to make because money is easy to spend. This is something we learn as we grow up. We get plenty of examples of how it can help us get many of the things we desire, but few people model the conservative side of the money game—tracking all their expenses.
When you don’t conserve money, when you don’t keep track of all your expenses, then you’re asking for trouble. If you don’t know where your money is going, you have no way of controlling it.
It’s unnerving how frequently we underestimate how much we pay for all the small things we buy that offer us ephemeral value, such as buying junk food to satisfy our momentary cravings. Yet when you track where your money went and tally up your small expenses, you’re surprised that you’ve spent so much for so little.
Here are some ways you can get much better at managing your money so that you know how much is coming in and how much is going out at all times
The Cost of Not Knowing Where Your Money Goes
When you consistently spend more than you earn by putting expenses on your credit cards, you finally reach a point where you can’t pay back the monthly balance in full. You’re now paying more for the products you purchased because of the high interest rates. Prestigious credit cards with a generous credit limit often charge the highest interest rates.
If overspending persists for a long time, you’ll reach a point of desperation. But even then, it’s still possible to tame your debt by applying for a consolidated loan, an effective debt repayment plan offered by lenders like Polo Funding.
If you’re in fiscal hot water with more money flowing away from you than toward you, it’s worth considering getting a consolidated loan. It will allow you to lock all your loans down at a lower interest rate and enable you to pay off all your creditors.
The Danger of Hidden Fees
While keeping a budget will go a long way, it’s not always easy to notice where your money goes. But you’ll get better at tracking your expenses when you educate yourself about hidden fees.
If you keep a budget and still don’t know where some of your money is going, it’s often because you didn’t account for hidden fees, such as high interest rates from credit cards or unsecured lines of credit.
While it’s possible to manage your finances well with credit, the system will only work for you if you pay your balance in full every month. This will prevent you from paying those dreaded high interest rates.
Whenever you’re offered a loan or credit, you need to learn how to distinguish between high and low interest rates. Sometimes you can negotiate for a lower one, but if the lender won’t give you a more reasonable rate, you should pass on the loan.
High interest rates and other hidden fees often tempt the naïve borrower to incur crushing debt because paying interest rates can double and even triple the original cost of a purchase.
You Can’t Change the Past, But You Can Influence the Future
While you can’t change what happened in the past, you can alter the trajectory of the future, influencing it by applying lessons learned in the past.
So, although you can’t tell what will happen in the future, you can stack the odds in your favor. Take a hard look at your current financial dilemma. Slice and dice it until you can see where you went wrong. Then take the necessary steps to prevent repeating history.
While it won’t be easy to set foot on the road to abundance, it will be worth it. Your long-term happiness depends on it.