Probably the biggest reason people don’t get rich is because they spend it all. Does that make sense? Jeeze, I hope so.
What most people do is they take what little money they have and immediately dispose of it. Popular methods of disposal are for things like cars, shoes, purses, toys (like quad bikes, watercraft, etc.), wreckless everyday spending, etc. It’s madness. None of this stuff really makes a person happy anyway so a lot of this spending can be cut. But by all means, if getting a daily Starbucks turns you on, go for it. After all, if you make $200 per day, a daily 3 quid cup of luxury coffee isn’t exactly going to ruin your life’s trajectory. So be reasonable when reading this post. Know what can work for you and what you simply don’t want to give up.
Now, I hate budgeting. If I ever use the word budget, understand that I just mean a general spending category I’ve noticed in my life. Like a grocery budget doesn’t mean I only spend xyz on groceries. Rather, that’s about the amount I spend each month that makes me happy. It’s not hard and fast rule.
So for your first step, look at what you spend. Get nerdy and account for everything. Do this for a month. What expenses surprise you? Now, take those expenses and find a way to reduce them. Sell an extra car. Drive less often. Begin cooking more at home. Get rid of an expensive hobby you don’t thoroughly enjoy.
What you’ll see is that you probably spend more than you think. You’ll also probably see how easy it would be to limit your expenses. Yes, on paper it looks quite easy. You can begin slashing numbers, no problem. But really it’s about adjusting your mindset. Is your mind really ready to cut back. Let’s discuss that next.
Your mind is a powerful thing. And it’s easily influenced by your environment. What many people try to change is the obvious. If they want to spend less, they decide not to go on a smoke break with their friends. They want to spend less on cigarettes. That is well and all but it’s not attacking the root of the problem. The root of the problem is not hanging around smokers in the first place. The same is true of living in a wealthy neighborhood. If you feel it’s tempting you to overspend, move to a different neighborhood. You likely begin to resent your frugal living if everyone around you is driving a new BMW. What you also want to do when going frugal is to change the root cause of your overspending.
One thing I noticed a year years ago is that there are many people who thinking being frugal is awesome. I learned that being frugal doesn’t have to make you a weirdo. Many people will actually prefer to be friends with you if you’re frugal. I know this is far from obvious. But many people who spend lots of money actually want to be frugal themselves. No one ever says they don’t want to be frugal. These people just have yet to master the willpower which you’re seeking to master right now.
Understand that it takes time. I watched a video from a well-known neuroscientist. In the video, he discusses changing habits. What he says may not surprise you. That’s because it’s quite simple. But you can rest assured in what you already know – now that a neuroscientist has said it. He says that habit change is not easy and it must be done slowly. He used his habit of drinking coca cola as an example.
He used to drink coke twice a day. He knew this was too much. He began cutting back to one per day. Then after a few weeks, he went down to one every other day. Then he went to only drinking one on Sunday. Habits take a long time to develop and a long time to change. In our society, our brains are almost wired from birth to be consumers. So don’t feel bad one bit if it takes you months to change your spending habits.
For another example, when I began eating healthy, it took years. I first gave up all fizzy drinks. Then I started drinking the right amount of water. Then I gave up desserts. Then I gave up most processed foods. And most recently, I’ve given up crisps. Again, this took years to do. I could have done it faster but that could have lead to a relapse. Habit change takes time. And once you change your habits, they would be hard to change back. Right now, I don’t want to eat desserts. They would probably make me sick if I were to eat a few right now. You too can get in that place with your finances. Overspending should make you a little sick.
Stop buying things you don’t need by first seeing what you currently spend money on. Then decide how to slowly spend less. Be sure to tackle the root cause of each overspending category. By doing all of the above, you’ll have enough money to do what you truly want to do with your time. And isn’t that what life is all about?
Will Lipovsky is a personal finance freelance writer and internet marketer. His most embarrassing moment has been saying to a Microsoft executive, “I’ll just Google it.” You can get in touch with Will at FirstQuarterFinance.com.