Happy New Year everyone! You’ve probably started the year with a few resolutions. The number one resolution I ask people to sign up to is spending LESS than they EARN each month. Sounds easy, but sometimes it’s not when you really take a look at the numbers – all the numbers.

I have clients who say, “we’re definitely spending less than we earn” and they rattle off their mortgage, car payments, electric  and groceries, to which I add, “how about ‘after care’ for the kids, psychotherapy, dry cleaning, and the cash you take out of the ATM?” There’s a lot to remember and a lot can slip through the cracks if you’re not on top of it.

Nothing replaces actually figuring out what you spend each month based on your checking statement, and credit card statements. I will release a video on how to do this soon, but you can look for little signs that you might be spending more than you earn each month.

1. If you have a credit card balance, does it stay the same or increase each month? Do you ever see it go down, meaning your paying off more than just this month’s purchases?
2. You eat take-out or fast food (any meal you didn’t cook or was not served to you by a waitress – yes, including grabbing a pizza from Whole Foods) for DINNER more than four times per month. Every client I have who spends more than they earn is guilty of eating too much take-out.
3. It is a bad sign if you get cash back at the store or go to the cash machine more than twice per week. Cash seepage is a common reason for overspending. Figure out how much cash you need each week and take it out once (twice if you like) per week on the same days each week.
4. Multiple transfers from other accounts means you don’t have enough in your checking account from your paycheck to cover your life.
5. Do you charge things on your credit card that you normally would pay with cash or write a check? Charging bigger items like camp, tax bills, car repairs, children’s activities or doctor’s bills is a sign that you don’t have enough to cover those items as they come up. (It’s fine to charge them for miles if you pay them off each month in their entirety)

The best sign is your gut feeling and your stress level around your finances. I’m not generally a ‘touchy-feely’ person, but my experience is that if you are spending more than you earn each month, it will come out in a general level of stress about your finances.

It’s rarely a complete surprise to people (though it might be a complete surprise to one person in a couple).  Someone knew or sensed something was wrong and it’s up to both parties to know your finances inside and out even if one person takes care of the finances on a day-to-day basis.

If you feel like you’re suffocating when you think about your credit card bill, if you can’t look at your credit card bill, if you just keep working and working and hoping it will all just come out okay, or if you seem snippy with your partner (or vice versa) when the subject of saving comes up, you are probably spending more than you earn.

New Year’s Resolution: Know what you’re spending and spend less than you earn!