I have a friend that consistently has issues with money. She complains that she can never pay her bills on time. However, when we go out, I have not noticed that she has problems buying dinner or paying for drinks. I admit that her speed at pulling out a credit card makes me slightly suspicious of her money management. So, this time when she complained, I asked her if I could help.
“Where do you spend most of your money?”
She answered “I don’t know” which was discouraging but not shocking. We have all heard that paying electronically or with credit cards makes it harder for us to feel our spending. Apparently she uses one credit card for “almost all” transactions. She had not looked online to see if it breaks down her spending so we did that and she was SHOCKED to discover how much she spends monthly in restaurants.
I admit to feeling relief that my friend only had one credit card going. I have known people with multiple maxed out credit cards, using one card to pay the minimum on another card. So, this is definitely not a worst case.
“Where are you willing to spend less money?”
This is key. It’s great to know how much you spend in places but if you don’t care or aren’t willing to change, the knowledge doesn’t help you.
She thought about it and decided she was okay spending less at restaurants if she did not have to cut back on bar spending. Then came the recommendation she disliked – I told her that if she really wanted to do reduce, she needed to actively track with pen and paper or electronic entry. This is all about making the spending real and being accountable to yourself. It isn’t worth fibbing to yourself because the credit card is going to tell you the reality. You just need to be active in the tracking and reduction.
She says she can reduce without having to track. I told her she’s trying to make a habit change without doing the work. We will see who wins in this argument.