Strong financial health is the product of a series of practices that enables you to know exactly how much money you have and exactly how you spend it. This requires daily recordkeeping to track income and expenses.

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The greatest thief of financial wellness is vagueness. People who are vague – meaning, unclear of what things cost and when bills are due – tend to fritter away money. Vagueness leads to impulse buying that sabotages long-term financial goals. Vagueness creates chaos.

The second biggest saboteur of financial health is magical thinking. Magical thinking includes purchasing lottery tickets and fantasizing how the winnings would be spent. Another form of magical thinking is not having the money to pay off debts in their entirety and, instead of making small payments steadily, waiting for the day when “your ship will come in” and you will be able to pay off the entire debt at once.

Spending and income plans help you avoid vagueness and magical thinking. Record every penny you spend and, after three months, design a spending plan (budget) that puts your needs and goals first. This may mean you give up certain things for the greater goal.  A good example of this is choosing to dine out less so you can save for a vacation, or ceasing to use shopping and spending as hobbies or ways to avoid loneliness.

When you take care of your money, it takes cares of you. For more information and a template for tracking expenses, visit: http://aces.nmsu.edu/pubs/_circulars/CR594.pdf