Why are you buying that “little splurge” when you say you really want to be financially independent?
Do you ever stop to ask yourself this?
Most of us do not.
We buy a little something here, a little something there, never questioning why we are doing it. It seems inconsequential in the moment.
Buying makes us feel good. We get that dopamine hit for a brief moment. Unfortunately, the feeling does not last and we are left craving that next hit, often via “shopping therapy”.
But, if we look at things from 50,000 feet we realize all those little things add up and take a big chunk of our income. They may even be what is standing between our current struggle and being comfortable (or even independent).
This is where having a plan for your money before you receive it comes in (learning how to embrace uncomfortable feelings also helps).
If you do not have a plan for yourself you can borrow this template. For every dollar that comes into your account:
10% savings
10% investing
5-10% giving (this has a range to factor in how much you volunteer)
10% play
10% education
50-55% general expenses
You can adjust it to fit your specific situation, but the important thing is that you are contributing equally to each of your “buckets”. People who struggle tend to put most of their money towards general expenses and play, without putting anything into savings, investing, giving, and education.
You could have buckets for upcoming major life events, like a new house, new car, travel, wedding, child’s education, or whatever is important to you.
The important thing? If there is no money in the bucket, you do not make the purchase. No swaps. No “borrowing” from one account to boost another. It is that simple (not necessarily easy, but it is simple).
The second-most important thing? Actually use the funds for what they are intended for. It does you no good to set money aside for investing if you never actually invest it. Use your education money to invest in yourself and your knowledge. And, be sure to play because all work and no fun… well, you know the rest.
If you are feeling brave, take a good look at your finances. Go back at least a month and see where every penny has been going. Are you surprised? Make changes accordingly.
Any questions? Please feel free to email me for more information or to discuss your specific situation. I would love to help you create a plan that allows you to become financially independent and start creating wealth.