Spend Less Than You Earn
May 28, 2020Building Your Future
At some point, we all worry about money, but for every stage of life, being wise with money starts with a plan. Developing money habits that are based on sound financial principles will help you feel more confident about your finances.
Have you ever heard someone say, “If I could just earn twice as much as I do now, I’d be completely set”? In theory, this seems like it’s correct. However, when people earn more, they tend to spend more. With each pay raise, it’s easy to let expectations, wants and desires drift higher and higher. It takes discipline for each of us to spend less than we earn. This is a continual journey and it isn’t as easy as it sounds.
If your hard earned dollars are spent before they even hit your bank account, it’s time to take a closer look at your finances and ask yourself whether you have an income problem or a spending problem.
7 tips for spending less than you earn:
- Control impulse buying – pause before you purchase and take time to ask yourself if this is a need or a want.
- Plan your purchases – shop with a list and learn to save for the extras you need or want.
- Use cash instead of credit – credit card companies can charge as much as 18 to 28 percent in interest annually on outstanding balances.
- Track expenses for 30 days – calculate all recurring monthly expenses and all total receipts for spending on non-essentials like eating out, entertainment, hobbies, etc.
- Create a spending plan – analyze the information you gathered and use a convenient online tool/app that tracks your budget and spending.
- Give yourself time to adjust to the spending plan – it can take a month or two to get on track with a new habit.
- Prepare a plan with a financial advisor – they will help you develop an approach to spending that will help you make the most of where you are now, without losing sight of where you want to go.
We have a wonderful opportunity to impact our families and our communities by changing how we view money. If we live with a mindset that more is better — we won’t ever feel like we have enough or can spend less than we earn to live within our means.
This key financial principle can actually lead to a “surplus mindset”. What is a “surplus mindset”? It’s the feeling of having enough for yourself, your family AND enough to share. This mindset comes from the idea that happiness and financial security have little to do with how much money we have and a lot to do with our view of money and the role it plays in our lives. When money is viewed as a goal — it is about getting it and keeping it. However, when money is viewed as a tool, it is about planning ahead to protect your family’s financial future and impact your community.
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