About a year ago, I spent a rainy afternoon going through my credit card and bank statements and categorizing the expenses. Most of the time, I have a pretty good mental picture of what I’ll discover when I do this – it’s when my mental picture doesn’t match the expenses that I start to worry.
What I couldn’t help but notice was that there were a lot of little charges to Amazon sprinkled throughout the bill.
Now, I expected to see a few of those little expenses. I buy a book or two for my Kindle each month as part of my usual budgeted entertainment expenses, so seeing a few little Amazon charges isn’t a big deal.
I just saw a lot more of them than I expected.
So, I started digging into the mystery by examining my Amazon purchase history. What I found, after some research, is that those purchases were actually Kindle purchases that I had made. I just had forgotten about a number of them and hadn’t adequately recorded them during the month.
How did that happen?
Well, it turned out that most of my Kindle purchases were made late in the evening. I would be reading a book on my Kindle or browsing the web in bed, usually some kind of light reading that usually helps me fall asleep. I’ll come across a mention of some other book or realize that I really enjoy what I’m reading, so in my rather tired state, I’ll go to the Kindle store, find the matching book, and buy that book with one click.
In other words, I was buying things in a very mentally tired state where I wasn’t using good judgment.
At a more coherent moment, I would immediately realize that I could easily pick up these desired books at my local library, and any books that my library did not have could be ordered through interlibrary loan. Not only that, I’d also realize that I have a rather long reading queue and I don’t particularly need more reading options right now (or ever, to be honest).
In other words, I had discovered a financial blind spot. The more tired I am, the more likely I am to make poor financial decisions and then forget about them in the heat of the moment.
Simply knowing this enabled me to put some simple safeguards in place that kept me from making the same kind of mistakes again.
However, the real challenge is simply finding your blind spots. I view a financial blind spot as being any situation where you aren’t consciously aware of a financial error that you’re making, often a repeated one, and those errors can end up being incredibly costly.
How do you find those blind spots? I have several strategies that I employ.
Strategy #1: Parsing Statements
My first – and most powerful – strategy for seeking out my financial blind spots is to simply give a careful review of all of my bank and credit card statements when they arrive. I go through each entry in those statements and figure out exactly what each of those entries represents.
When I’m finished, I start looking for patterns. I organize the entries in order of the companies that I made a payment to and add up how much I spent with each company. I group together all of my online expenses, too. I mark each entry as necessary or unnecessary and look at my unnecessary totals.
What I’m looking for is any indication that I don’t remember an expense or that some group of expenses is out of proportion with my family’s budget. Both of those things are signs that I’m choosing to blind myself to some sort of personal financial mistake.
I find that using a program like You Need a Budget makes this process substantially easier. It becomes easy to group and organize all of those transactions with just a few mouse clicks.
Strategy #2: Changing Your Routines
I’ve found that, time and time again, ordinary routines create blind spots for me, so I often change up my normal routines for doing things. I do this in a number of ways.
Every so often, I’ll delete my password and credit card information from online sites. This often exposes situations where I’ve made online shopping such a normal routine that I might not really think about my purchases and might become blind to the mistakes I make there.
I’ll often change up the usual route I use to drive when I go shopping for groceries or other things so that I don’t fall into a routine of stopping for a coffee or something else like that.
I’ll often experiment with my work routines, both to see if I can come up with a better and more productive way of doing things and to expose things I might be overlooking with my old way of doing things.
Your ordinary routines often mask little mistakes that you’re making because you think of them as just part of your routine. Changing up your routine often brings those bad moves to the surface.
Strategy #3: Asking for External Perspectives
My wife and I have a strong relationship. Part of our strength comes from the fact that we regularly watch each other for mistakes and aren’t afraid to voice those mistakes to each other when we discover them.
Sarah has seen many of my own financial and personal mistakes, things that I wouldn’t have thought much about without her input. She’s let me know when I’m taking things for granted or when I’m spending too much time or energy or money on something.
And I do the same for her.
The end result is that we often expose each other’s blind spots. Without a strong trusting relationship behind that, such things could result in anger and confrontation, but there’s an implicit understanding that we do such things to make each other better, not to tear each other down. Neither one of us is perfect. Both of us want to become better. Both of us are willing to accept a little criticism along the way.
If you have a strong and trusting relationship with your spouse, be open to hearing the comments they might have about how you live your life. You may just find that such a routine helps you find your blind spots.
Strategy #4: Reflecting on Moments
One thing I often do in the evenings is reflect on some of the key moments from my day. I rethink how I did things in that moment and ask myself if I could have done better or why I made the choices that I made. The goal with a routine like this is to reflect on my ordinary choices and improve them.
The interesting thing is that I often end up reflecting on moments from my day where I made decisions that aren’t very clear to me. I don’t know why I made that choice. Those moments are almost always blind spots of some kind or another.
By asking myself why I made those choices – and repeatedly asking why – I often figure out some deeper truths (and deeper challenges) about my life.
At the same time, by mentally role-playing through those moments and making better decisions, I often take a strong first step toward eliminating that blind spot.
For example, I recently found myself replaying my decision to buy a cup of coffee from the kiosk in our local grocery store. It’s not something I do every time, yet that day I did it almost without a thought. Why?
Upon replaying that scene in my mind, I realized my motivation was tiredness. I wanted a pick-me-up. It wasn’t something I consciously thought about at all, but it was there. A better solution would be to avoid the grocery store when I’m tired, or do something that makes me more awake when shopping. Not only is it free, it also offers a strong helping hand when it comes to making smarter grocery shopping choices.
Strategy #5: Asking Honest Questions
Most of the strategies described here are self-reflective. They require me to ask hard questions of myself – and face the honest answers to those questions.
However, none of those strategies work if you’re not willing to do that with honesty and sincerity. Many people laugh off self-reflection as useless, but the real reason is that they’re either not willing to ask themselves honest questions or they’re not willing to give honest answers to those questions.
Sometimes, you’ve got to criticize yourself in an honest way. Your choices aren’t perfect. However, at the same time, you also have to realize that you’re overall a good person who makes mostly good decisions. Self-criticism doesn’t mean telling yourself that you’re terrible. It means pointing out where you’re not perfect and seeing if you can find a better way forward – and you usually can.
Be honest with yourself, both in the questions and in the answers.
Financial blind spots can be dangerous. They can lead not only to not having enough money to go around, but a strong sense of financial insecurity in that you don’t have a good sense as to where all of your money is going. It just seems to disappear.
All of us have a blind spot or two, but it’s never a bad idea to take steps to discover those spots and to correct them. Doing so leads almost directly to a better life with a much stronger connection to your financial bottom line.