By Melissa Cassar
Anyone who’s ever tried to lose a few pounds knows that not every diet works for every person. Similarly, it may take a few tries to find a system for managing your personal finances that you can stick to.
For many people, a simple program called Wealth Watchers could be the solution. As its name might imply, Wealth Watchers features the journaling technique popularized by Weight Watchers, where you track every morsel eaten — or in this case, every dollar spent — each day.
The idea is that by carefully monitoring your spending habits, you become more aware of, and more likely to change, behavioral patterns that caused you to overdo it in the first place. The program also places heavy emphasis on the importance of financial education.
Wealth Watchers was born from adversity. Its founder, Alice Wood, was a successful estate-planning attorney in the U.S. whose occupation made her very knowledgeable about personal finance issues. But after sustaining a brain injury during a freak airplane accident, Wood suddenly found she was becoming forgetful, unable to concentrate and prone to making poor financial decisions that later plunged her into debt.
Another byproduct of her accident was unexpected weight gain.
“I went to Weight Watchers to help drop the extra pounds, and in one of those ‘lightbulb’ moments, I realized that the solution to both my weight and spending problems lay in the simple, daily discipline of keeping track,” Wood said.
After developing and practicing the core principles that would come to define Wealth Watchers — such as ‘spend less than you make’ – Wood began sharing her ideas with family members and friends, and eventually with larger groups. She published a book entitled Wealth Watchers: A Simple Program to Help You Spend Less and Save More.
The book contains formulas for calculating what it costs to live each month, as well as worksheets to track your daily disposable income (DDI), which is the amount you can safely spend each day without going into debt.
“The difference between your DDI goal and your actual average daily total of expenses will show you if you are staying on track,” she said.
Another feature I like is the ‘Call to Action for Consumers,’ a 16-step roadmap for achieving financial health. A few of those steps people sometimes overlook include:
• Make sure your partner is on board with your goals.
• Define and understand the difference between fixed, semi-fixed and discretionary expenses.
• Set up and strictly follow a bill payment system to avoid late payment charges. Many people find automatic payments from credit card or checking accounts helpful.
• Know your ‘small leaks’ — spending weaknesses that can undermine your goal (e.g., buying unnecessary gadgets).
• Share your goal with others. That’s why so many folks find Weight Watchers meetings helpful.
The bottom line is: Find a system that works for you. For Wood, adapting techniques she learned from Weight Watchers to track and control expenses was the key to her financial recovery.
Melissa Cassar directs Visa’s financial education programs in Canada. To follow Melissa Cassar on Twitter visit www.twitter.com/MoneySkillsCA.