Boosting your financial health in 2017: Part one
Keep track of your spending to know where your money is going.
For many, a healthy lifestyle will be at the top of the list when ranking 2017 New Year’s resolutions. While this is important, what about financial health? The harsh reality is that personal finances are often overlooked. According to the FINRA National Financial Capability Study of 2015, 18 percent of respondents reported spending more than they earned, and 50 percent reported not having a “rainy day” or emergency fund. These behaviors can lead to financial instability and even debt.
It is difficult to make any changes with our spending if we don’t know where our money is going. Therefore, the first step, prior to making a spending plan, is to track your spending for one month and then add them up. Easy ways to track your spending are to either write every purchase down (examples include fast food, coffee, dry-cleaning and hair cut) or to save all of your receipts. Tracking allows you to see exactly where your money is going and what your spending habits are. Small purchases over time can really add up, so try to plug your spending leaks.
In addition, it is important to understand that your money values greatly impact the way you spend or don’t spend your money. To better understand your money values, take the Money Personality Assessment. For Michigan residents, consider taking the Michigan State University Extension Financial Health Index - Financial Health Survey.
The next article in this series will focus on the benefits of a spending plan, also known as a budget.
For additional money management resources, visit Michigan State University Extension. MSU Extension’s financial literacy and homeownership workshops throughout the year to help you become financially healthy. For more information of classes in your area, please visit either the MSU Extension events page or MI Money Health website. Additionally, you can take the Financial Health Survey at MI Money Health to assess if you’re financially healthy and discover more ways you can improve your financial health.