Change your spending habits for success.

Ref: Pixabay


In my last article I wrote about The Value of Money as you can read about in the link here.

The main point that I was trying get into was how the value of money can be very different to in different situations. Every person has a different value on money and what can be done with it.

If I were to hand you $100 then it is worth is $100.
That is the numbers side of the game and to some people the most important part of it. However to a starving family that $100 is food and shelter for the night. Another day of life and another chance to live better tomorrow. That is the actual value of the money.

Regardless of how much income you have or what number that amounts to, what we all have in common is the ability to do better. The number that you take home at the end of the month isn't the most important part of your earnings.

The most important part of your earnings is what you have left after you take all your expenditure away from your income. When you look at your account on the last day of the month, has the number grown since the last time or have you spend all of your income over that period?

This will apply if you are earning $100 or $100,000 dollars every month. How many retired sports stars have we seen with nothing after earning millions as they couldn't grasp the simple fact of spending within your limits. That is just the basics for survival, never mind thriving.

Personally, I don't want to be working hard into my 60's and so this isn't even good enough for me. If I want to enjoy those years then it is up to me firstly to make sure that I am spending less than I am earning every month and then secondly that I put that extra money to work going forward so that I won't have to.

Work smarter, not harder.

Ref: Pixabay

The simple solution to this issue is just to spend more time working which will increase your income and if your spending stays the same that will increase your net savings every month. The only problem with that however is that the more you earn, the more that you will lose in taxes and in time. Working an extra 20 hours a week might increase your income but your quality of life will fall dramatically and those extra hours you have worked will not be as valuable as the first hours that you have worked due to taxes.

That is why it is much smarter and easier to reduce the spending than increase the income but will still end up with more money left over every month.

If I challenged people, to look closely at their spending for the past month. Is there a saving of $100 that could be made?
There is nothing drastic in this figure. It’s only $25 per week or think of the equivalent in your country. That is about 3% of my wages.
Sounds tiny, doesn’t it?

Just thinking about my own circumstances and over the past month I have spend that on,

• Cigarettes
• Whiskey
• Sweets
• Diesel
• Tv channels
• Takeaways
  
  

Cutting out any one of those would have done it for me. With that said, I am a big fan of all of those things and don’t really want to cut them out. Where is the fun in life without these things? However if I reduced my use of these a little on each one, it is an easy saving that I won’t even feel.

Then there are the recurring costs. Areas where you can do a lot better and save a few dollars every time. Look at your,

• Mortgage
• Internet
• Subscriptions
• Utilities
• Heating
• Fuel
  
  

Now tell me that with a little effort you can’t cut $100 by reducing, reusing or switching your providers between all of these recurring bills? I know that I could.

It’s a mindset change that is the hardest part in my opinion. We can all do it and we should all do it. However until the time comes where it is essential to do it, will we put in the effort?

I could save a hundred a month with very little effort if I took a day to sit down and analyses all of my bills but it will take a lot longer to go out and create an extra $100 in income.

Until it becomes essential to cut back on spending a lot of people don’t have the motivation that is required to get up and do something about it. We all say that we would like more money and yet we can leave so much behind us on a monthly basis that is worth far more than a raise would be and just takes a little work to achieve.

The goal for everybody should be to end each month a little better off than the one before it and build up some savings. Not to be living month to month and even if you are comfortable right now, would it not be better to get ahead early in life rather than looking at your finances in 30 years and trying to get started at that stage?

If you make these changes now it will give you a pot to go out and try to make your money start working for the future. $100 a month might seem small but if you build on it consistently and keep adding to it consistently it will grow at an exponential rate over the next few years.

These small changes will be the basis for your long term future and if you can make that money work for you over the next twenty years with the right investments it could be a very happy retirement. We all know the benefits of dollar cost averaging into certain investments and if we had made these changes three years ago and put $3600 into Bitcoin monthly over that time we could be looking at over 20k today.

The good news is that it is never too late to start building good habits and there are always opportunities out there to earn some returns on your finances. Money will always make more money.

Part 3: Making your money start to work for you. Coming soon.

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