First of all I have separated my bank accounts to more easily manage my money. I'm not done with the process of settings up all accounts but I've started with what I feel to be the most important first changes. Previously I basically had two accounts. The first account was the account to which I got my salary and other incomes. It was also the account to which my debit card was connected. (I'm swedish and we don't use credit cards much but instead advocate debit.) I used this account for basically everything. From paying bills to pay for beer at the pub. The other account was a sort of savings account. It didn't really have any high interest or anything, but it was an account to which i occasionally directed money that I wanted to save. However as my spending habits started to go crazy I all too often directed money from the savings account to the debit account. Noticing this was the first indication that I should probably do something about my spending and money situation.
Now I instead have a set of accounts for specific purposes. First of all I've separated my debit card account from everything else. In this way I can conciously move the amount of money that I feel that I can afford to spend to my debit card and always check how much I have left (although I have other means to control my spending so I do not have to check). So in the beginning of the month I check my budget and set up weekly transactions of an appropriate amount from my salary account to the debit card. I use the salary account for all other bills. This way I get a weekly allowance of guilt free money to spend. To make sure I have enough money for the neccessary food (i.e. groceries I keep at home) I keep a joint food money account together with my girlfriend to which we both transfer a set amount of money every month.
This is how my accounts look and work today. However, I then intend to have a set of savings accounts for specific purposes once my financials are on track. One for each targeted savings goal. I will keep this within the same bank to I can easily transfer money to the accounts and easily take money out of it when ever I spend on something from a specific category. For instance, I might have an account for clothes from which I will take money when ever I buy a pair of jeans, or an entertainment account from which I take money when ever I buy a Wii game.
I just recently also opened a savings account at www.avanza.se. They offer good means of buying stocks and mutual funds, and I intend to start investing money in index funds once all dept is paid. I will make monthly transfers from my salary account to the account at avanza for me to invest. This is money that is being saved for the long term.
The second most important thing I have done which is the thing I've been doing for quite some time now, is keeping track of my money. I built a web site on which I submit whenever I buy something. It tells me how much money I have left and calculates how much money I can actually afford to spend every day. This tool has been invaluable and has really inspired me to not spend like I used to. I would say that it is the main thing that has helped me change my spending habits.
So, all money I manage NOT to spend is now being used to pay off dept. The current dept I have right now is from when I used my credit card to much a couple of months ago. I'm really looking forward to have this dept paid, and I feel that once I have it will really be a new page of my financial life. Right now I have been spending much less than what I would like to be able to spend. I've had to say no to more social activities than I would have wanted. I will still say no to some, to stay within my budget, but I want to have the choice to attend them based on more than the content of my wallet. It will also enable me to instead save money and eventually start to invest it to try and build wealth.
To summarize. The two things I've done that really helps me financially is:
- Debit card account separate from salary account. This makes me conciously decide how much money I want to spend.
- Keep track of my money. This inspires me to not spend as much as everytime I do spend I have to make a note of it on my web site.
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