“Show me where a man spends his time and money, and I’ll show you his god.” –Martin Luther
Do you ever wonder where all your money goes? Does it seem like you get to the end of the month and there are more bills than there is money… again?
Change HOW You Buy, Not What You Buy
I challenge you to track where you spend your money from your next two paychecks. If you’re buying just one soft drink from a vending machine at work per day at $1.50, that is $30 per month. We’re not about to say “you shouldn’t drink that soft drink.” This isn’t about removing the fun in life to save money. That would be terrible advice.
But, maybe there’s a smarter way? You could buy a 24-pack from the grocery store for $6, drink one a day at work at 1/4 the cost, and still have 4 cans left over at the end of the month. That means you have $24 extra at the end of the month from just one simple change… and you’re not even cutting out your soft-drinks. Now, $24 may not sound like much, but if you can find just 10 similar, simple changes like this… that adds up to an extra $240 per month, without depriving yourself of the things you like.
But First, You Have To Know Where Every Penny Goes
If you track your spending, you can use techniques like this to find ways to spend less money while still enjoying the things you currently enjoy. You will also find things that you are spending more money than you realized on things which really aren’t that important to you. Typically these are impulse purchases at the cash register, or recurring subscriptions for things you don’t really use… sometimes you might even have forgotten you’d subscribed in the first place.
When you actively focus on where your money is going, it gives you a clear picture of whether your money is actually doing what you want it to. A dollar here and a dollar there for impulse purchases adds up quickly, and can end up stealing money from the areas of your life that you find most meaningful.
Of course the easiest way to ensure that your spending matches your priorities is to create a monthly budget and stick to it.
Quick & Easy Monthly Budget: Tell Every Dollar Where To Go
- Add up how much money you make each month.
- List your mandatory expenses (food, rent, phone, car insurance, etc.).
- Subtract mandatory expenses (2) from your total income (1).
- Whatever is left is considered “disposable income.” You should set exactly how you want to spend every dollar of that money. Determine how much you want to spend on:
- Games or movies
- Future expenses like a vacation or birthday/holiday gifts
- Other recurring expenses, like oil changes or haircuts.
- Anything else you spend money on… or might spend money on.
Your budget should be the last word on how your money is spent. If something comes up as an impulse buy or an unplanned expense, you can absolutely spend your money… but first you should decide which of the other parts of your budget need to be adjusted in order to pay for it. It’s annoying to have to make decisions like that when you’re excited and ready to buy… but here’s a simple truth: Either you control your money, or your money controls you.
Are You Going To Be The Master Of Your Own Destiny… Or A Slave To Money?
Left to its own devices, money flows freely and fast. When you make a conscious decision to tell it exactly where to go, right down to the last penny, you’ll find you actually have more control over your money and your finances than you thought. That control is the first step in beginning to build wealth.