On New Year’s Eve this year, I sat and took stock of the big picture. The shifts I have experienced this past year left me feeling rather reflective on the year’s events and what I hoped to accomplish in the coming year.

Like Jeffrey, I chose a theme for 2006, mine is Purpose: awareness of what my purpose is for my life, each day as I live it, in each action I take, in each thought or belief I entertain.

I took the time to write out my goals for this year, financial and otherwise. Knowing the impact that writing goals down has on one’s ability to achieve them, I felt it was important to see in writing the things I want to accomplish this year. This blog is absolutely part of that process: not only does it allow me a way to log my progress but it makes me accountable for my intentions as I share them with you. A bit scary, but undoubtedly helpful! And hopefully it will help you learn about your own situation too.

I can already say that in the several weeks since agreeing to write this blog, I have already seen a positive impact on my finances and other areas of my life. As I wrote my goals on New Year’s Eve, I recognized I had become lax about a few habits over the past 6 months and I saw a few areas that needed tightening up. So I committed to resuming some habits and adjusting a couple more to get better results. One habit I sorely needed to get back to was regular financial review.

After tracking my expenses in Nancy’s course, one of the things I did both to save money and to be better informed about it, was to switch to a more basic service plan at my bank, one that went from “unlimited” to one that only includes 20 withdrawal/bill payments/cheques per month. This meant I became much more aware of how many withdrawals I made during the month, exactly how often I was using Interac (generally when I had no cash in my pocket!), and it stopped me from using other Banks’ ATM machines - which not only used my allotted transactions, but tacked on extra services charges as well (I used to think “it’s only a buck or two…who cares?!). Before this change I didn’t pay close attention to my bank statements or how many withdrawals I made in a month, so I never really knew how much was coming in or going out. Because I paid for “all inclusive service” I didn’t really care what happened in my account. I knew in another couple of weeks there would be another paycheque to cover those service charges, I figured that they were simply the price I paid for the “freedom of not having to watch every penny”, something I always detested having to do because it felt stifling.

Once I understood the value of knowing exactly where my money is going and reviewed my bank statements for a full year to see my habits, I realized the price I paid for “freedom” of not having to watch my money was actually one of the factors keeping me financially imprisoned!So I chose a new service plan that would cost me half as much per month yet still leave me room to do the necessary banking without my spending being frivolous or unaccountable, AND allow me to be much more informed about the state of my money. The key components of this choice were:

• To stop buying on Interac all the time (I still use it on occasion, but it’s covered in my 20 transactions);
  To make between two and four cash withdrawals per month to live from between paycheques (again, covered in my 20 transactions);
• To review my finances weekly (or semi-monthly at a minimum - i.e. before I withdraw money from the bank).
  These steps require me to be aware of my habits, where my money is really going, to know how much I’ll need to spend between now and the next paycheque and to actually hand over cash so I can feel it leaving my hands when I spend it! (Very different than handing over plastic, for sure!)

Over New Years I realized I had fallen back into old habits: I was not reviewing my finances carefully, was not considering how much I needed to live on for the next two weeks, I’d simply withdraw some cash & when it ran out, draw some more. This habit was partly responsible for that “sinking feeling” I was having prior to Christmas…it was fear, a sense of dread, not knowing exactly where my finances stood after having spent more than a year being very aware. I recognized that I didn’t like the feeling the lack of that knowledge created, so I’ve again begun the process of reviewing my finances, and specifically apportioning my income through the month so all the bills are paid and I have cash to live off of for my weekly expenses.

This allows me to move money around where I want to spend it instead of just spending it willy nilly and then seeing my account dip into overdraft protection because I wasn’t alert. I feel much more secure when I know what’s happening with my money.I also divert more money to debt reduction because I’m paying attention to all the balances in my various accounts. I don’t just slap on a minimum payment and forget about it till next month. It’s so rewarding to see those debt numbers diminish with each statement, I want to keep moving forward!

Perhaps this will inspire you to look at your own habits and what you might do to make some small but significant changes. It’s amazing how they add up so quickly!

Next time I’ll talk about some of other goals I’ve set for the coming year and my plan for achieving them. Until then, may you be “Savvy with Money”!

Kat