Spending Wisely by Practicing Cognitive Spending

Take out your last checking account statement. Add up all ATM withdrawals. Now, tell me where the money went. If you’ve got a really good memory you can probably recall $.75 of every dollar. Most of my clients have a hard time remembering more than half their cash expenditures. Since the best—in fact, the only—way to cut back on unnecessary spending is to figure out exactly where your money is going, you’ve got to improve that percentage.

Keep a blank index card in your wallet. Every time you spend money, write it down. At the end of the week categorize your spending. Then at the end of the month do the same. After two months I guarantee you’ll be able to track every dollar, if not every penny. That will give you a chance to come up with lots of little ways to save money—like having a cup of coffee at home rather than buying one with your morning paper. Do that for a year and you’ll have saved more than $300. Even more important, you’ll have gotten into the habit of thinking about how you’re spending your money.