In my book about managing your money, Money Smart, I write about maximizing your money to its full potential. Here are 7 key steps from the book to change the way you think about spending your money to help you make your current income level work. Each one individually has the potential to make a big difference, and together they can transform your personal finances.
Last week, I talked about the Rules of Money, and where there is money there is SPENDING. We couldn’t get through Financial Literacy Month without talking about how we spend our hard earned cash. If you want to do well financially, there is a sure-fire way to do it. Spend your money wisely. Remember, one of my Money Rules says it all: It really isn’t about how much you make, but what you do with it that counts.
In my book about personal money management, Money Smart, I share the 10 Rules of Spending Wisely. In the previous two blog posts, I shared the first two of three Spending Rules, and here is the third rule that will help you get the most from the money you spend.
Spending Rule: Understand Today’s Sales Game
Thanks to technology, the game of selling has changed quite a bit in recent years. That’s why you need to understand today’s sales game. If you don’t, you will be at high-risk of spending far too much of your hard-earned money where you really didn’t intend to—and even being played for a sucker at times. Here’s another way to ensure you spend your money wisely.
Let’s say you want to buy a car. You go to a dealer and take a test drive. The salesperson makes a copy of your license, as required in case you take off with the car. While you’re driving, he keys your license number, and the license number of the car you just drove in with, into his computer. By the time you get back he knows a lot about you, like your credit history, car ownership profile, financing history, and more. If you’ve already visited another dealer the chances are good he now knows what happened there, like how much you were offered for your trade-in and the reason why they didn’t close the sale.
Don’t think he’s just trying to sell you a car. He’s after a lot more. On the financing alone he doubles his commission. And the same goes for the trade-in. Then there are the warranties, maintenance contracts, VIN etching, fabric protection… The list goes on and on. Today’s auto industry is on the cutting edge when it comes to sales techniques and tracking online research. Learn to handle auto salespeople and you can handle almost any other type of salespeople.
To protect yourself and to become a smarter consumer, educate yourself. I wrote Money Smart as a common sense manual for learning to manage your money in everyday living. Read and put into action the 10 Rules of Money and the 10 Rules of Spending, and you will make your money go farther and be more successful with money.
Last week, I talked about the Rules of Money, and where there is money there is SPENDING. We couldn’t get through Financial Literacy Month without talking about how we spend our hard earned cash. If you want to do well financially, there is a sure-fire way to do it. Spend your money wisely. Remember, one of my Money Rules says it all: It really isn’t about how much you make, but what you do with it that counts.
In my book about personal money management, Money Smart, I share the 10 Rules of Spending Wisely. Yesterday, I shared the first of three Spending Rules, and here is the next rule that will help you get the most from the money you spend.
Spending Rule: Always Look at the Annual Cost
To understand the real impact of your spending choices, always look at the cost over a year, not just at the cost today. Let’s say you spend $4.50 for a fancy coffee, or $10 to eat lunch out five days a week. Those seem like small expenses, but the annual costs are $1,125 and $2,500, respectively. That’s $1,875 and $4,165 before taxes; $142,000 and $318,000 in thirty years at a 6% investment return. This is what you are actually trading away with those small purchases. Remember to also look at how much sooner you can stop working, or spend time at something you’d enjoy more. This doesn’t necessarily mean you shouldn’t spend that money. It’s your life and your choices (or financial trades). Just be sure you take the time to calculate the annual cost and fully understand the true size of the trade involved in your purchase.
April is Financial Literacy Month and I started the month talking about defining financial literacy and how to begin. Then I started to talk about the money rules. There are nine rules to the game of money that I describe in my book, Money Smart. They are absolutely critical to your success with money and its role in your life as you work to create financial freedom. Follow them and you will quickly see a positive change when it comes to money. Break them often enough and you will almost certainly insure that money ends up subtracting from your happiness rather than adding to it. So here is the second of three of the nine Rules of Money that I am sharing:
Money Rule: Be Disciplined
Discipline simply means being committed to doing what you need to do to get the things you said you wanted. To be successful with money and to be successful in life, you need to be disciplined. If you are not, you are unlikely to achieve anything like the life you wish. With a positive attitude and good discipline, your chances for success with money and in life are very good. You will find that this money rule will have an especially large impact on your chances for success. In Money Smart, I discuss strategies for boosting discipline, because it is a challenge for everyone.
I provide nine Money Rules in Money Smart; and three great money rules here to get you going on your road to success with money. The Rules are a road map to success, follow them and find your way to financial freedom. Financial Literacy Month is a great time to start.
April is Financial Literacy Month and I started the month talking about defining financial literacy and how to begin. Then I started to talk about the money rules. There are nine rules to the game of money that I describe in my book, Money Smart. They are absolutely critical to your success with money and its role in your life as you work to create financial freedom. Follow them and you will quickly see a positive change when it comes to money. Break them often enough and you will almost certainly insure that money ends up subtracting from your happiness rather than adding to it. So here is the second of three of the nine Rules of Money that I am sharing:
Money Rule: Have a Written Financial Plan and Follow It
You must have a written financial plan that identifies what you want and how you’re going to get it. If you do not, you will have created a very high probability that you will never achieve the kind of financial freedom you desire. Your written financial plan is the map of how you will spend and save your money and reach your destination. Over the years, through talking and working with a lot of people about their personal money management, I have been stunned that most people do not really know where their money goes. Plus, half of the people who believe they live within their means do not. They just don’t know it. If you do nothing else, you absolutely must know how you actually spend your money and its impact on your life. Write down your plan and follow it. My book, Money Smart, walks you step by step through the process of creating a personal money management plan that is simple to follow. All the tools you need are there and electronic versions of the worksheets and calculators are free on www.moneysmartonline.com for your convenience.
April is Financial Literacy Month and in the past two blogs I’ve talked about defining financial literacy and how to begin. Now I would like to talk a little bit about the rules. There are nine rules to the game of money that I describe in my book, Money Smart. They are absolutely critical to your success with money and its role in your life. Follow them and you will quickly see a positive change when it comes to money. Break them often enough and you will almost certainly insure that money ends up subtracting from your happiness rather than adding to it. So let’s talk about the first of three of the nine Rules of Money that I will share over the next few days:
Money Rule: It Isn’t How Much You Make, But What You Do With It That Counts
There are two roads to success with money. The first is to make more money; the second is to spend more wisely. Most people focus on the first road while downplaying or outright ignoring the importance of spending wisely. However, study after study shows that for most people the overwhelming majority of financial success in their lives comes from being smart about how they spend their money. I am not suggesting that you don’t try to make more money or that you live like a pauper. I’m just asking you to recognize which purchases or expenses will really end up adding to your happiness in the long run, and which will not. I’m asking you to be reflective about your spending and make smart spending choices. If you do that and spend your money wisely, it will pretty much insure you will end up being financially successful. If you make a lot more money in the future, that’s great, but the second road, spending wisely, is pretty much a sure thing if you work at it.
