But first of all…
Record your costs!
In order to plan, you have to know your expenses. It is indispensable.
The good news is, that recording your costs will not necessarily lead you to spend less in every situation. It’s the opposite, I advise you to live just like before. Buy everything according to your habits. The only difference should be the fact of recording. How much do we spend? What do we spend the money on?
As soon as you get a picture about your average spending/month, compare it with your income. Let’s say you earn $2000 per month and you spend around $1000, it means you are OK. In this case, you may skip the first step. Let’s assume you have the same amount of income, but you spend $1800. In this case a change is necessary.
Your goal should be to increase the difference between your income and costs drastically.
1. Decrease your costs. Let’s start with the big things.
Undoubtedly, you can save some money by skipping casual luxury spendings, restaurant dinners with your girlfriend and going out with your friends. However, the truth is, that it’s going to make you feel bad regularly. Moreover, it’s not going to have a huge impact on your financial status. Winning big, and losing a lot is possible throughout the big things. Do you live alone, downtown, in a big property for $1000 per month? In the country side, you could have a gorgeous apartment for a small proportion of that amount. Take the advantages of being a poker player, and not being stationary. Would you like to stay in the city? Choose a smaller, but practical flat in another neighborhood. Are you sure that having a car in a city with a great public transport is cost-efficient? Even taxi cab would be cheaper not to mention other alternatives that are healthy too. I could continue on and on, but the fact is: Changing these big things require a single decision. Moreover changing all the small things require daily repetitive decisions. Put yourself in a good position, and begin with meaningful details.
2. Increase your Income – Move to the next level!
While you just can’t push your costs under a certain level, your income has the potential of growing limitless. Improve your play continuously, always try to find a way to move up to a higher limit, take the necessary steps day by day. Maybe you are stuck somewhere, and it’s hard to admit it because your life is comfortable. Don’t wait until your choices vanish, start increasing your incomes now!
3. Know, what is important to you!
When I heard about this method, and I started to apply it, suddenly everything got fixed. I got rid of the compulsion to consider all the spendings each.
List the most important things in your life (things money can buy), and rank them. Let’s say the first thing on your list would be to go on weekend excursions with your friends or with your girlfriend, while you have a car, or you dine in fine restaurants from time to time. Maybe you enjoy these things, but they are not on the top of your list. Regrouping your costs seems simpler now.
Do yourself a favor and start spending or saving money on the things that really matter to you!
In the light of that, what were your most superfluous spendings, and what did you neglect?