Money & Career
What your Wallet Says about Your Finances
8/6/2018 11:33:48 AM
Wallet

What’s in your wallet?  
Is it stuffed with crumpled currency and a wad of outdated, faded receipts?  Does loose change slide around the bottom of your purse and across the floor of your car?  If you answered yes, then it may be time to reassess your financial management skills. 

Financial experts agree that while you may think these types of details are insignificant, the way you manage your day-to-day finances does reflect your money personality. "The way you handle your cash – literally – is often very much in line with your beliefs about the role of money in your life,” says Phylan Poe, Branch Manager of Lakeside Bank’s Westlake location.  

Interestingly, research has shown that there are many different types of money mismanagement habits that can be detected by examining the contents of a wallet. For example, Poe says many people have no idea how much money they have on hand at any given time. "They don’t know how much cash is in their wallet or in their checking account, and they aren’t worried about it because they’ll buy whatever they need with a credit card. These are types of people who are likely to be unaware of the balance in their savings or even their retirement funds.” She says they may just not be diligent enough to keep up with the balances, or they may be afraid to face the stark reality of their financial situation. "This is dangerous, because you are much more likely to spend beyond your means if you don’t have at least a ballpark figure of how much money you have available. The first step toward better financial management is knowing how much money you really have. Then you can establish goals and start doing a better job of budgeting and saving.” 

Are you one of those people whose wallet is always empty? If your cash seems to quickly disappear every time you get it, necessitating multiple trips to the ATM between pay checks, Poe says you should do a better job of assessing how you are spending your money. "In all likelihood, you are probably spending more than you think you are on small things that add up to big chunks of your discretionary income.” To get started on better awareness of spending patterns, Poe advises keeping a record of everything you spend for several weeks. "You’ll be surprised at how quickly you learn exactly where your money is going.”

If your wallet is disorganized, with crumpled bills and money in different compartments, and if you have money haphazardly scattered around your home or vehicle, you may want to take a closer look at how well organized your finances are. "If you leave money just lying around, you’re basically saying it’s not important enough to put it in a safe and protected place,” says Poe. "Someone who treats money carelessly often does not respect money or put a big enough focus on the financial aspects of their life.” Poe says the key to changing this behavior is recognizing the buying power of the money you’ve been discarding. "Add up all of the miscellaneous bills and coins you have scattered around. You’ll probably be surprised at the total and will soon start giving your spare change the respect it deserves.” 

Another big wallet problem is receipts. You pull out your wallet and can’t even get to your money without sorting through several months’ worth of receipts. "This is usually a person who knows they need to do a better job of keeping track of their spending and thinks by just hanging onto receipts they are making progress,” says Poe. "But keeping them is not enough. You have to take the next step to organize them – which means getting them out of your wallet and into a filing system.”

And then there’s the person who has all the bills in their wallet lined up from largest denomination to smallest, or vice versa. They always know exactly how much money they have and have a firm grasp on how much they are spending and saving, tracking every last penny.  "While this type of person thinks they have the best possible financial habits, they still face the potential for a different type of financial misstep – not allocating any money for fun,” says Poe. "As with anything else, moderation is key. If you are too rigid in managing your day-to-day money, you could also be too strict about building relaxation and fun into your long-range financial planning.  It’s important to reward yourself for your discipline – take a vacation, purchase something you’ll enjoy that you’ve been saving for, or just buy something fun occasionally.” 

Poe says examining your wallet for clues about your financial personality is a great – and simple – exercise in gaining insight into your personal money management.  "Taking a closer look at what you do with small amounts of money in your daily life can help you refocus and become more disciplined about your big financial goals.”
Posted by: Kristy Armand | Submit comment | Tell a friend

Categories: Finances

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