One fun surprise that has come out of starting this blog is the discussions I’ve had with various people I work with about personal finance.  Obviously my closer friends have known for some time that personal finance is a big interest of mine but to many others I work with they had no idea.

Almost always the chats begin with how they wish they knew more about finances but they have no idea where to begin.  Of course I always tell those who will listen that taking control of our finances is easy and it only takes 3 steps to fix your finances.

Step 1) Read a book

Okay I know I may be passing the buck a little here but honestly if you read just one book on personal finance you would probably know more about money than 70% of the population.

My go to book these days is Preet Banerjee’s, Stop Over-Thinking Your Money! The Five Simple Rules of Financial Success.  It’s a quick read that will give you a good overview of just about everything you need to know.

Learning about our money does not need to be intimidating.  Some of us get turned off because the terms used just go over our heads but trust me just reading one book can really change how we manage our money for the better.  Fortunately I’ve read quite a few books and have some recommendations.

[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][icon name=”share” class=”” unprefixed_class=””] Related: Top Personal Finance books for Canadians

Step 2) Track your spending

It’s hard to get a grasp of our money if we have no idea where it’s going, so start tracking your spending.  All you really need to do is write down EVERYTHING you’re spending money on for a month or two and it should give you a pretty good picture of what your spending habits are.  The key is to log everything, including those quick, small purchases you make every day.

I’ve always had good saving habits so I didn’t think much of this exercise until I tried it out for myself.  I was amazed at how much I was spending . . . well wasting really on certain items.  I’m not suggesting we save every dollar but I realized that some of the money I was wasting could be used for things I enjoy more.

fix your finances

Step 3) Make a budget

Now that you’ve got a clear picture of where your money is going making a budget will be easy.  There’s a ton of budget templates out there but I like the one by Kerry K. Taylor of Squawkfox so download her template to get started.

Just plug in your hard expenses and then set a realistic budget for all the other categories based on what you found when tracking your spending.  Remember budgets aren’t set in stone; you’re going to make a few adjustments until you find the numbers that work for you.

Of course making a budget is one thing but sticking to it is another.  Since I prefer to use credit cards I still track my expenses just to make sure I don’t go over budget.

Final word

There’s no “right” way to do things, just find a system that works for you and stick to it.

It’s that easy, 3 simple steps to fix your finances.

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  1. Cristina on May 7, 2014 at 9:28 pm

    Great suggestions Barry! I’ve always been careful with my spending. It’s important to track how much we spend but also what we spend it on. Before I buy I ask myself, is this a “need” or a “want” and what is my priority? For me it’s travel. I’m happy with the basics of life like wearing the same clothes from last season, staying in to watch a movie, renting a book from my public library, or taking public transit to save for my next big trip. I find I get the greatest, more meaningful happiness from travel and experiences rather than things that I own and when I get to take that big trip I feel like it was all worth it!

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