First, do you have a wallet? A friend told me that in Japan there's a tradition of buying a new wallet at the beginning of the year. At first I laughed at this notion and thought, "Marketing!" After careful reflection I started to see how this makes sense. Many people are making promises to themselves to get out of debt for a variety of reasons. Some want to have a zero balance on their credit card, others want to go on vacation, some just want to be able to afford something nice without buyer's remorse. Whatever the reason, starting with a brand new wallet can be the beginning of a wonderful relationship. Yes, I'm encouraging financial planning with buying a new wallet.
So back to the beginning, do you have a wallet? If so, open it. What do you see? Crumpled receipts? A folded bill? Dust mites?You may wonder what does your wallet have to do with your finances. It's simple, if it's disorganized, then maybe your financial house might be disorganized as well. Your wallet may be your first indication that there is a problem. Before you start a business, you have to get your financial house in order:
1. Look for a wallet that helps you hold all your business cards, credit cards and point cards (for my Japan people) in separate compartments.
Once you organize your cards you can start to decide what should you keep? You'll be able to see where you shop? And you'll know often you use certain cards. For instance, I went through my wallet and noticed I was a point card junkie. I had point cards for everywhere! The thing is, I actually don't shop that often at the same places. The one store I love shopping at doesn't offer a point card and when I shop it's because everything is 3 for sen yen/ten dollars. So, out with all the extra point cards. I only need the important ones Tower Records, because I like magazines and occasionally I'll buy one. Vie de France because I think that bakery has the best raspberry, cheese strudel. Blue Parrot and Book Off, two places where the points come in handy! One thing about the Book Off card, it can cover more than one place. You can use it at coffee shops, convenience stores and other places. Consolidate! Now my wallet is trimmed!
2. Take out your credit cards!
In step one I told you to look for a wallet that can hold your credit cards. That doesn't mean you have to carry them. Take out your credit cards and leave them at home. You'll be thankful for it later. A lot of times if you are going out to dinner and you have a card, it could be used as a backup or a get out of jail free card. However, that $50 dinner will cost you so much more with 6-13% interest tagged on it six months later. If you leave your card at home, the initial rush to purchase may fade. Now, if you are still pacing in your apartment 2 months later bemoaning the fact that you didn't buy that washing machine/dryer combo, then maybe you actually needed it
3. Look at your bills and change.
Are your bills crumpled and folded up? Are they all facing the same direction? Do you know which part of your wallet has the bills in it? In Young, Fabulous & Broke, Suze Orman talks about respecting money. If you don't respect it, it won't respect you.
4. Keep your receipts!!!!
If you are trying to maintain an organized wallet, why would you keep your receipts? Because when you go home you're going to write down what you did and what you spent. It may take a while, but you'll start to notice how much you spent on bills, entertainment, and extras. Extras can be anything from a candy bar to a t-shirt that you really didn't need.
Organize your wallet so it matches your financial intelligence!