With the holidays upon us, now is not the time of year to have a money meltdown. So read ahead at your own risk, but save the freak out for after the 1st of the year!
I have a money meltdown (freak-out) about once per year (my wife says twice a year) and it’s been serving us well (for a lack of a much better way to say it). So what happens during my money meltdown mode which lasts about two weeks…
First, I look at every penny that is getting spent and start slashing costs wherever it is feasible and not too extreme. Yes, our children still have shoes, but it’s debatable if they really need new ones for the summer when it’s so warm. 🙂
Second, I look for trends in our spending that didn’t exist before. Unfortunately, that sneaky lifestyle creep we’ve discussed in the past does not skip your household just because you’re a financial advisor. This trend spotting is a lot easier to do with so much spending done on just one credit card. I can see how we compare to last year and previous years and identify the culprits.
Third, I increase all of our monthly savings amounts by a significant enough amount to notice it. Saving money needs to be a little painful!
When I am not in money freak out mode, I still check our statements each month, briefly, to make sure there are no fraudulent activities, or mistakes and I have alerts set up to stay on top of the working of our finances, but I save the true detective work for meltdown time.
It is important to stay on top of where your money goes, but the practical side of an annual money meltdown is that life is busy. If the plan is working, it doesn’t need to be under a microscope all the time. Money is something we need everyday, but with the right approach, plan and teamwork, not something that should need worrying about everyday.
Who wants to join me on this year’s upcoming money freak out?