debt, freedom to go back to school, even freedom from cleaning your house, if that’s what you choose to spend it on. It’s easy to ignore your money. So many people


pay the bills that come in and at the end of the month their bank account seems to be a little bit lighter than they’d expect. Teir money seems to passively dis- sipate into the air. If they don’t have creditors knock- ing on their door they probably don’t give much thought to their money at all. Be mindful of how you’re spending your money.


Pay attention to where it’s going. Make sure that every transaction is one that is purposeful and en- hances your life. Te thing people find most difficult to do around


gaining control of their finances is to figure out where their money has been going. Unless you’ve been keeping records, you may have to track your spend- ing for a few months. It’s necessary that you know where your money goes every month. You can’t possibly make conscious, informed decisions around how to change your spending if you don’t know what your spending habits have looked like in the past. A nice side effect of paying attention to every


transaction is that you might find that you make different decisions than when you were mindlessly pulling out your credit card and not even looking at the amount when you signed the slip. If you know that you’ll have to go home and write down that you spent $300 on a pair of boots, even if that account- ability is just to yourself, you might think twice about that purchase. As you’re making any financial deci- sion, take a moment to ensure that you can see how it will improve your life, and not just add to the pile of stuff that you have at home, as well as to your credit card bill. Once you have real knowledge about where your


money is going, you can look at that in relation to where you’d like it to go. Look at how much you’re spending in each category and think about how it


July/August 2016


compares with what you’d like to be spending. Decide whether you feel good when you look at the amount you’re spending on going out, your cell phone, travel. Don’t forget giſts and charity. Tink about whether you want to be spending more or less in each area. Now identify your goals. Take an hour and con-


sider where you want to be in five or ten years. Maybe you want to buy a house or are thinking about having kids. Perhaps you want to pay off some debt that has been hanging over your head or you’ve been fantasiz- ing about quitting your job and opening a bakery. You need money for each of those things. Once you have your goals in mind, look at where your money is actual- ly going so that you can identify the habits you need to change to start using your money to reach those goals. It might help to make your goals more solid. Esti-


mate how much you’ll need in the bank to reach your goal in five or eight or ten years. Calculate how much you will need to save every month to make that happen. Ten go ahead and take the first steps. Open a savings account and arrange for an automatic transfer to hap- pen monthly. Record the transfer in your checkbook as if it’s another bill you’re paying every month. Even if your monthly savings amount right now won’t be enough to reach your goal within that timeframe, start with what you can and add to it as you come across extra money. Increase the amount as your income increases. Having a specific goal in mind may make it easier to be disciplined about saving. If you have a particular goal in mind for your savings, you’ll be much more motivated to make the necessary sacrifices. If you pay attention to where your money is going,


and make active decisions around how you spend it, you will be using your money as a tool to make your life better. Tat’s what it’s there for.


Allison V. Bishop, CPA, is a personal finance coach in Portland, Maine with 18 years experience as a CPA. She seeks to help her clients make conscious decisions around their money in order to reach their financial goals. Her website is allisonbishop.com. See ad on page 11.


Essential Living Maine 17


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