No matter your marital status, religion, sexual orientation or sexual appetite, these techniques will not lose their effectiveness.
I’ve identified 15 money habits you can use now or in the future. Since I don’t want to breeze through each of them, I’m posting three habits over the next five posts.
What we got here is a series, folks.
Now let’s see if I can put an unforgettable spin on classic money habits that’ll last a lifetime.
Create a Spending Plan
Aargh! You see what you made me do?
You’re complaining so hard about calling your income-minus-expenses a budget, you got me using this pointless euphemism. Have it your way, but we both know a spending plan ain’t nuttin’ but a budget.
Clearly laying out the money coming in and the money going out tells you where you are.
Line by line, you see the opportunities.
First, you capture the income:
- Salaries and wages
- Side income
- Child support
- Scholarships, grants, fellowships,
- Interest, dividends, and other passive income
- Social Security and pension payments
- Every other way you can extract money from the universe
Then, document your expenses.
- Taxes (income, property, and otherwise)
- Electricity, water, and other utilities
- Insurance (health, life, disability, auto, renter’s, etc.)
- Retirement investing
- Every other dollar the universe demands of you
Creating a spending plan is like turning a light on a room full of roaches in the middle of the night.
The analogy is a little disturbing, but the roaches were already there. You just exposed them. You can turn the light off and go back to bed, OR you can deal with the infestation.
All you need to do now is figure out which income sources to increase and which expenses to decrease.
Pay Yourself First
Ah, you knew it was coming.
Once you’ve done a budget (I can’t keep up this charade), you should know how much you can reasonably save.
Personally, I’d like you to save at least 20% of your after tax income. I know that’s not realistic for everyone, so if you can’t do 20%, do 15% or 10% or 5%. Just do what you can!
You know how Uncle Sam directs your employer to take his cut of your paycheck before you get it?
Uncle Sam does that because he knows you’re unlikely to pay him what’s due if you get your impulsive, little paws on his money first.
He’s right. And if you don’t copy his collection strategy, you won’t save anything for yourself.
Paying yourself first is really easy. Have your savings taken out of your paycheck before it’s deposited into your bank account.
Generally, you can have your net paycheck split between at least two bank accounts. Your savings goes into a savings account. The rest of your paycheck goes into a checking account.
If that isn’t an option, set up automatic transfers from your checking to your savings account a couple days after your scheduled payday.
Live (Well) Below Your Means
When it comes to money, I’m pretty conservative. I despise debt, and I hate long contracts.
In order to even have the option to live below your means, i.e., spend less than you make, you gotta be nimble.
Keep a nice, comfortable gap between what you earn and what you spend. Not only will you build greater financial wealth, but you’re better able to respond to life’s changing circumstances.
People with high, hard to replace incomes are particularly vulnerable to the result of not living well below their means.
My friend, Chrissy, is totally miserable at her job, but she’s paid handsomely for her services.
Occasionally, we talk about her desire to buy a home in the metro D.C. area. The thing is, prices of single family homes around these parts are so high they border on the verge of disgusting.
I beg Chrissy to not buy a house until she deals with her employment situation. How could a home possibly bring her any joy when she’s stuck working with people she despises in order to support the mortgage payments?