Do this BEFORE you make a budget

Hey Friends!

‘Tis the season for both reflecting on the past AND looking ahead to the future. Which is especially important to do with our money!

It’s how Jen and I (Jill) are preparing our finances for this New Year and we want to show you how!

Many personal finance experts want you to START with a budget, but we think that’s a terrible first step. 

Because in order for a spending plan (i.e. a budget) to be successful, you need to have the skills to take action on that plan. 

But we can’t know what skills to build unless we look at our past and current $ behaviors.

Enter the glorious 90-day transaction inventory! 🗓️🧾

(We actually have a walkthrough video of how to do this on the resources page of our book, available to all those who order Buy What You Love Without Going Broke.)

But in the meantime, here’s a guide to get you started:

1. Gather a list of all your purchases over the last 90 days into 1 spreadsheet (or print it out). You can do this by downloading a .csv file from your credit card company and bank and upload it all into a spreadsheet.

2. Arrange the list in order of date and begin looking through the purchases to identify any patterns.

3. In a column to the right of the purchases make notes about things like:

   a. What prompted this purchase? (i.e. time of day, location, stress, friends, etc.)

   b. How did buying this make me feel afterwards?

   c. Am I glad I bought it? Do I even remember buying it?

4. Review your notes and consider where impulse or habit purchases are being made and what spending behaviors you want to shift or items you no longer want to buy (at least for the next month).

5. Write down things you can do instead when feeling pulled to make purchases you weren’t intending to.

Now that you have a sense of how you manage your money and the things you typically buy, you can make a ‘spending plan’.

It should include both your fixed and discretionary expenses with room to spend on the things you feel really good about buying. 

It won’t happen overnight, but as you take action on your plan and become more aware of your habits, you will get better at saying ‘no’ to the things you don’t value and ‘yes’ to the things you feel confident spending on. 

Hope your holidays were bright!
Jill

⭐️⭐️ P.S. Want to share all this goodness with your friends AND earn cool Frugal Friends merch?

**Means this is a sponsored or affiliate section. We may earn a small fee or commission when you choose to try one of our sponsor or affiliate partners. But opinions are still 1000% our own.