by Simon Wright

Created on: October 27, 2007

Money consciousness is knowing how much you're paying on bills and groceries. And it's knowing what your short and long-term financial goals are. And it's also being aware of just how lucky you are to have money when so many in the world live in poverty.

I must confess that I was guilty, in younger years, of lacking money consciousness. Money came into my bank account and went out of it, and every now and then I'd remember to put some into a savings account. I was also spending without thinking about whether I was getting value for money. Money was something that came into and went out of my hands but I wasn't not truly aware of its value.

I think, for most of us, the process of becoming money conscious begins as we progress through our various life-stages. We leave the family home and suddenly we have to live within a basic budget. Then, we buy a house and get married, have kids, and all these events help shape our understanding of the importance of money and, at the same time, help us realise that there are more important things in the world than just money.

So, if you've had that road to Damascus moment and are becoming money conscious, what can you now do to cultivate that burgeoning awareness? Well, here are a few suggestions:

1. Become familiar with what you're spending money on.

You don't want to become an obsessive on this, but it can be valuable to look at your bank statements for the last 3 months. Group your spending into categories such as Mortgage', Travel', Food', Entertainment', etc. This will give you a feel for what you're spending money on, how much is left over (if any!) on each pay day, and may help you identify savings that you can make.

Also check the return that you're getting on your bank accounts to make sure you're getting value for money.

2. Set yourself some financial goals (as part of a financial plan)

We rarely achieve our heart's desires without creating some sort of road-map as to how we are going to work towards achieving them. So, if you want to live that dream of early retirement in the Bahamas, then you better start setting yourself some savings and investments goals and figure out how you're going to meet them.

I like to set myself both short-term goals (e.g. keep credit card balance at zero) and longer-term goals (e.g. save 5,000 this year), and I then review how I am doing against that plan on a monthly basis.

3. Read up on financial matters

None of us start knowledgeable about finance matters. I've not yet heard a baby whose first

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