Once a month, our banks and credit card issuers send us a statement in the mail (or online) outlining every single item that we spent our money on over the last month. We can see a big list of the checks we wrote, the stores we swiped our card at, the online shops we conducted business with – all in one place.
There was a time when I dreaded seeing these statements. They were evidence of how poorly I was managing my finances. I’d glance at them, try not to think about them, and toss the envelopes into a storage box “to look at later” – meaning “to forget about… or at least try to.”
As I began my financial turnaround, these statements turned into a source of pride. I loved seeing my ending balance on my checking account, comparing it to my starting balance, and feeling good about that increase. I loved looking at my credit card statements and seeing the opposite – a lower ending balance than a starting one.
Today, I see those statements as a tool – one that I’ve turned into a game of sorts. Those statements are among the best helpers I have in keeping my spending in shape and helping me to avoid repeating spending mistakes.
The process is simple.
Whenever I get a statement in the mail – a bank statement or a credit card statement – I walk through it line by line. I try to identify every single item that exists on that statement. What did I buy with this $28.92? What is this $9.96 on here for?
What I’m trying to do is identify all of the purchases I made that gave me little or no lasting value. If I spent money on something that wasn’t a life essential and didn’t give me lasting value, I probably spent that money for a pretty dumb reason.
I didn’t need to spend that $6.42 at the gas station to buy beverages. Why did I do that? Why didn’t I just fill up some water bottles or juice bottles before we left?
What on earth did I even buy when I spent $18.92 at Books-A-Million? It was probably a book… but I am not even sure which book I bought. That’s a pretty dumb purchase. I could have just checked out a random book at the library and received the same value.
I spent $49.95 to renew that magazine for another two years? I have seven back issues of it sitting on the end table unread! I need to cancel that subscription… and if I can’t, I need to set up a reminder to poke me in about twenty months to cancel it then.
The goal of this isn’t to beat yourself up. It’s to identify the purchasing mistakes you made and think about them so that you don’t repeat them.
No one is perfect. We all sometimes buy things that we really didn’t need to buy. I’m a sucker for books, for example, as well as board games.
The thing is, I know I’m a big sucker for those things because I constantly bear witness to my spending mistakes. I know to be wary in any situation where I might be buying a book or a board game.
I also know lots of things that I simply shouldn’t ever spend my money on. It’s a waste of my money to buy gas station beverages when I could just spend two minutes before we leave to fill up some bottles for everyone. It’s a waste of my money to ever purchase a Bluray disc, because I’ll probably only watch it once and, if that’s the case, I can just rent it via Redbox for $1.50.
Seeing those mistakes on that statement provides a simple way to reinforce the good decisions and knock down the bad ones. That way, each statement is a little better than the last one. Over time, they contain more and more decisions I don’t regret and fewer and fewer decisions that I lament. That’s progress, one little step at a time.