Here in the United States, Congress makes the budgets for our country. When they’re finished with a budget, it gets sent up to the president who currently has the power of full veto, meaning he (or she!) has to either completely accept or reject the budget as is. Unfortunately, this leads to instances where policies that wouldn't necessarily get passed on their own, like some food and agriculture provisions, get squeezed into a budget last minute. They may be phrased in a way that is not quite bad enough for the president to reject the entire budget and risk a government loan default or shutdown. The president of the United States used to have the power of "line-item veto," something 44 states still allow their governors to do, which allowed him to go through the budget item by item and reject a few specific things before accepting the rest.
So how does this apply to your personal finances? I love the idea of going through a budget line by line. Reviewing all of your transactions over the last month, last couple of months, or the last year helps you see what you have spent money on in the past that you are going to veto from now on!
A great tool to do this is Mint — my personal favorite tracking app. There are many different tracking tools out there, but I like that Mint lets me put all of my accounts, personal and business alike, in one place. I can see my whole financial picture at once. One really neat function on the site is an "All Transactions" button that will show you all your transactions across all accounts and all categories, chronologically. Sometimes certain transactions may not be taken into consideration in a budget unless you're looking at the whole. So why not try it for yourself? Hook up all your accounts and just look at everything in one place at one time. Then you can either print out this helpful downloadable PDF that we’ve created, or just take out a legal pad, and start going through every item line by line. See what you discover about every single transaction that you've made.
Now, this is where I'm going to go a little off the beaten path. I recently read The Life-Changing Magic of Tidying Up by Marie Kondo. If you haven't read the book, one of my favorite parts of her organizing method is systematically taking every single thing you own — every item in your home — and holding it in your hands, and seeing if it sparks joy. Now, that might sound a little emotional to you, but there is a way to take the principles behind that concept and apply them to your finances.
As you go through all of your transactions, take a look at each line and ask yourself three basic questions:
- Do I need it?
- Does it help earn income?
- Does it spark joy?
If a transaction doesn't meet any of those three criteria, I want you to take a good hard look at it. If it's something that recurs and you don't need it, get rid of it right now. You'll feel a new lightness come over you. You’ve just started to declutter a financial drain on your system.
If this sounds like something that could help you, go and do it right now. Yes, you're investing a little time in this, but the discoveries you make can save you a lot of money. Take action against the bloated spending in your own budget and it will be worth your time.
I'd love to hear what happened when you did this! How did it go for you? Did you discover something you'd forgotten about or make some connections you've never realized? If you’d like to hear the rest of my tips and strategies for decluttering your finances, listen to the full version of my podcast. You can also subscribe to the channel if you’d like to receive weekly financial fluency episodes.
Jennifer Turrell is a member of the DailyWorth Connect program. Read more about the program here.