Become Financially Responsible in Three Easy Steps

The vast majority of us think of how we manage our finances and know immediately that we can do a much better job. The challenge is that we fall into habits around our spending that we become comfortable with and even defend. When this happens, we waste a lot of money, and never consider that there are better options that we can take that will cause us to spend less and even save money.

Many people look at their financial situation and get down on themselves and feel as if they cannot do any better than they are currently doing. The reality is that with a few common sense steps, anyone can improve their financial standing. Here are the three easy steps for how to spring clean your finances and become financially responsible.

Understand where you are spending your money

The first thing you need to do to become financially responsible is to understand where you are spending your money every month. The reality is that most people actually have no idea where their money goes and are often surprised when they find out. They can give you the big items and tell you what they cost, but they often have no idea about the small things that add up to a lot or the purchases they make incidentally.

For instance, if you are a generous gift giver, you might be breaking your financial bank. Or if you are spending $5 twice a day at Starbucks for your coffee fix, that amounts to more than $200 per month that is flying out of your pocket. Understanding exactly what you were spending gives you an opportunity to place value on what you are getting for your money spent.

Make a plan to be more responsible

The next important thing that you must do is to create a plan that makes you more responsible. Now that you know what you are spending your money on, you can then design a strategy to intelligently spend less. This plan should be in writing and should take a close look at all of your expenses.

You will likely find that many of your expenses are for items that are not necessities. Perhaps you need a specific thing, but the brand or amount that you were purchasing is way more than you actually need. If this is a case, having a plan will allow you to zero in on that particular item and make a positive financial change.

Take action NOW!

Taking action is the last and most important step to becoming financially responsible.  Knowing how you are spending your money, and then making a plan for making better spending choices are very important steps, but unless you utilize this information and then implement changes, nothing good will happen.

You need to make some common sense changes to your habits in order to become financially responsible. For instance make your morning coffee at home and find a cheap local brewer or less expensive chain when you are at work. Dunkin Donuts coffee has been compared with Starbucks in terms of quality, but is about half the price. Making changes like this across your life can add lots of additional dollars to your pocket and ramp up your savings.

Take things one day at a time and remember that even small changes add up over time. Soon you will have your finances under control and even have money to invest.