All financial success stories have one thing in common. No, it’s not getting out of debt, working a budget, investing wisely or tracking your net worth.
It’s spending less than you earn.
You’ll never be debt-free if you spend all your money every month. A budget won’t matter either — don’t bother. Investing and growing your net worth? Hard to do when you spend all your money. Of course all those things are important, but not if you don’t have any money to begin with.
If spending less than you earn is a struggle, start with these two steps.
Track your spending.
The first step is to create a plan for your money. It can be an eye-opening experience to see where all your money goes. People usually find all kinds of wasteful spending when they start tracking it. Hundreds of dollars worth that can be re-directed to more useful places. Tracking your spending isn’t just for beginners — it’s a life-long habit.
Work a budget.
A budget allows you to plan where your money is going (rather than wonder where it went). Sounds pretty basic, but you’d be surprised how many people have no plan for how to spend their money. With no plan, it’s no surprise that you aren’t making progress. Planning where your money will go helps you spend less than you earn.
Use your favorite budgeting app to track your spending and work a budget. There are plenty to choose from. Visit howdoimoney.com to find one that works for you.
After you have these two steps under control you can get out of debt faster, save and invest more and grow your net worth.
Spending less than you earn is often called “breathing room.” The more breathing room, the better.
It all starts with spending less than you earn.
Take a deep breath and good luck!