I want to share five common areas that are costing you a bunch of money. They are preventing you from saving, keeping you from paying off debt, and getting on the road to financial freedom! If you want to stop the paycheck-to-paycheck cycle and you're tired of being broke, try some of these! I promise you will see a difference.
You don’t have a budget!
According to a recent Gallup poll, only 32% of households maintain a household budget. What does this mean? It means the other 68% of us have no idea what’s going on with our money. Over the years, I have heard many people say that budgets don’t work, they are a punishment, they are no fun, or they're only for people who don’t make that much money. Most of these excuses are dead wrong! The fun part, I might agree with a little. Budgets aren’t always fun, and I am certainly not going to sit here and tell you that I just LOVE to work on my budget. I don’t, but I can tell you that I do love money in my savings account! I have ZERO debt, NO payments and nobody owns my family or me. We save a considerable amount of money for our future and retirement, and we get to have lots of fun with money because we actually have some now that we have a plan for our finances! THAT’S FUN, and it is worth the hour or two we spend each month planning our monthly budget. If you don’t have a budget, get one! It's miraculous what this little tool will do for you!
You don’t track your spending, write it down!
This goes hand-in-hand with your budget. Most people who don’t have a budget have no idea where their money is going and what they are spending it on. Have you ever opened up your W2 at the end of the year, or if you're from Canada, your T4? You look at the total amount of money you made, and then at your bank account. You get that sick feeling in the pit of your stomach because you realized you worked all year and you don’t have much to show for it. That's why you need to start tracking your spending. It isn’t so much the big purchases that tend to put us in the hole, it’s all the smaller purchases that tend to add up. It’s death by 1,000 cuts. Get yourself a notebook or use an app on your phone and track what you spend your money on. This, along with budgeting, can completely change your financial life.
You spend more than you make. Stop it!
There are a ton of awesome things I would love to buy, trips I would love to be on right now, and I would love to eat out anytime I want! But I don’t, because I can’t afford that kind of lifestyle and neither can most other people. I've tried to live a lifestyle that I couldn’t afford, but guess what? I ended up dead broke. It’s a simple concept, but often hard to live by because of the marketing of products and debt. You can’t spend more money than you make. I don’t care how much they say you need their food, car, boat, vacation, makeup, or whatever else they're peddling you. Simply put, if you spend more than you make, it will not end well for you and your family! Living broke is no way to live. Live below your means, practice patience and contentment, save up for what you want/need and pay cash!
You don’t have an emergency fund!
According to a recent MarketWatch article, 19% of people have ZERO saved for an emergency expense, and 31% have less than $500. “Wait, isn’t my credit card for emergencies?” HECK NO! An emergency fund doesn’t kick you when you're down and charge you interest and late fees. And it certainly doesn’t make annoying phone calls when you can’t pay your bill. A real emergency fund is like a giant bear hug (the good kind) during a crisis or an emotional situation. We all know that life is going to suck sometimes. Flat tires, emergency room visits, parking tickets, your dog ate mouse poison... Emergency funds are one of the most important things I teach people to do, and it's usually one of the first goals I have people set. Emergency funds are essential, go and start saving for one!
You don’t have a plan. Be a Goonie, and get yourself a map!
Do you remember the movie The Goonies? If you haven’t seen this movie, I highly recommend you check it out. Mikey and his friends find a treasure map in his dad’s attic. The treasure map held many clues and provided a direction to find the famous pirate, One-Eyed Willy’s lost treasure. Finding the map started a fantastic adventure of running into bad guys, booby traps, amazing water slides, and let’s not forget the truffle shuffle! Now, I don’t want to ruin the movie, but if it weren't for the map, Mikey and the Goonies wouldn’t even know where to begin, or where they were going. Your financial life is no different. You need a plan. You need a map—a direction of where you're going. Not everything worked out perfectly for the Goonies along their adventure, and it won't for you either. But with a plan and a map, you'll be much more likely to reach your financial goals. “Hey, you guuuuys!”
After reading these five tips, you might be thinking that this is just common sense. Yep, it is! But, many people aren’t using common sense when it comes to their money and finances. Jim Rohn once said, “What is easy to do is also easy not to do.” If you commit to change these five things as they relate to your financial life, you will have success! Get started today!