Most people think that the secret to solving their problems is more money—they think that if they increase their income then they’ll be able to buy more stuff and life will get easier. I’ve seen surveys where people estimate that if their income increased 10% it would make a huge difference to their standard of living, but the problem is that when they reach that amount, they still feel they need another 10% on top of that as well.
It’s a never-ending cycle of income (and spending) increase, so let’s break the cycle right now by learning 3 steps to buying more stuff you want right now.
Step #1 – Awareness
Most of us have no idea where our money is actually going, and we have to ask ourselves whether we’re spending it on things that really matter to us. The little things we buy have an amazing way of adding up and we have to look at their long term cost to fully understand what we’re losing. For example, if you spend just $4 each weekday on snacks and coffee, you will have spent $1000 in a year. Are those snacks really giving you $1000 of value each year? Or would you rather be spending that on a vacation, your family, or a hobby you love?
Action Step #1: Take a little notebook or piece of paper with you for the next week and write down everything you spend money on. Then take these figures and use them to estimate your yearly spending. You’ll be amazed what this easy exercise will reveal.
Step #2 – Prioritize
Now that you know where your money’s going, you need to ask yourself if you’re really happy with your spending habits. Maybe you really want your snack and coffee habit but you could do without some magazines. Maybe there are some food items you can do without, or you could cut back on your electric bill somehow. Everyone’s spending is their own personal choice and it’s completely up to you where you spend your money. That being said, I suggest that you prioritize your spending based on your own personal needs and wants—that way you’ve made a conscious choice to spend your money on the things that are most important to you.
Action Step #2: Make a list of all your current spending and put it in your own order of importance. Are there things that you’d like to buy that you feel you can’t purchase now? Add them to your list and work out how important they actually are to you in comparison with everything else.
Step #3 – Management
Now that you’ve determined what’s really important to you it’s time to embed some habits to help you get them. The reason that it’s easy to spend $4 a day on snacks and not save for a vacation right now is simply because of our established routines. Change your habits and you’ll bring more of the things you want into your life.
Once you decide what you want to buy then you can put a strategy in place to get there. Let’s say that you want your $1000 vacation but never have that much in the bank. Well, now we set up a strategy where you put just $4 a day towards your trip. I like to withdraw my spending money in cash at the start of the week, so I know exactly how much I have to spend on food, fun, and my long-term savings goals (which goes into a clearly labeled jar or savings account). If I run out of fun money that week then I have to wait until Monday rolls around before I can spend more.
You’ll be surprised how easy this discipline becomes with a little practice, and it’s easy to stay motivated when you have your vacation fund growing right before your eyes. If you find that you keep dipping into your savings, then put barriers in the way, such as moving them to an account that’s hard to access or giving them to a trusted friend for safe keeping.
Action Step #3: Create a money-management strategy that works for you. Make it simple and easy to follow, and use safeguards to stay honest. When temptation strikes remember the true cost of that $4 snack and decide if it’s really worth it.
When you implement the Awareness – Prioritize – Management steps in your life you’ll find yourself buying things that you could “never afford” before, and enjoying your money a whole lot more.