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How to Change from a Spender (100|0|0) to a Saver (80|10|10).

How to Change from a Spender (100|0|0)  to a Saver (80|10|10).

So what’s with all of these numbers anyway?

The spender can look something like this: 100 | 0 | 0

Live” with 100% of your monthly income.

Save” with 0% of your monthly income.

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Give” with 0% of your monthly income.

And the saver can look something like this: 80 | 10 | 10

Live” with 80% of your monthly income.

Save” with 10% of your monthly income.

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Give” with 10% of your monthly income.

So what are you: a spender or a saver? If you are like me, you are probably somewhere in between and your significant other is unlikely to have the same numbers as you do. There is some math to this, so be prepared to have pencil and paper in hand.

The challenge is to change your numbers so you will never revert back to being that “spender” ever again! Change your numbers gradually by a small percentage (1 to 4% each quarter) and in 8 quarters (2 years), you will be where you want to be!

Let’s start by doing a reality and motivation check.

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The reality of our culture is to collect “stuff.” George Carlin, the late comedian, had a comedy sketch that nails this. George did not always use delicate vocabulary, but he sure could make you remember his point.

Our motivation to be a saver (and not a spender) is weakened by our desire to live in “ATM” mode. We like the freedom (but not the responsibility) of getting anything we want whenever we want. The secret here is timing. Go ahead and plan to spend what you want—but not all right at this very moment. Take your time (the rest of your life) doing it. The more you think about the value of your spending, the less money you will need to acquire the lifestyle that you want. It is also a sustainable approach, and that will motivate you to spend “wisely” and not “quickly!”

Say you go out to a flea market and buy a thing-a-ma-jig for almost nothing! What a great purchase, right? You put it in the garage (where the car could go)  and 3 years later you realize that you haven’t used it once. You decide to donate it to Good Will and at least recycle it.

Three years ago you also spent some serious coin on a really nice self-propelled grass mower because you have too much green on your property. You own two blades and you keep them sharp which helps you get a clean cut on your lawn. You now have to buy another one because you just plum wore the thing out. Now which was the better purchase?

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Well, now it’s time to do this spender-to-saver conversion plan, so let’s get organized. There are three steps that will get you on the road to abundant living.

  1. Track your debt and start eliminating outstanding balances.
  2. Live below your means. You can do things to reduce the cost of living AND increase the quality of your life.
  3. Save using a three bucket accumulation plan, sequentially at first and then concurrently, once you are in the savings groove.

First, go here to download your complementary copy of your Debt Trakker. Complete ALL the debt metrics because you need them to decide what to pay minimums on and what to target as your first debt victim.

Second, go here to download your complementary copy of your Budget Master. This organizer is a real eye opener and will tell you two things. It will show you where your spending makes you feel bad and where your spending makes you feel good. And I’m NOT talking about how much “stuff” you are accumulating along the way. Keep working on it until ALL your spending makes you feel good. And spending includes saving and giving.

Third: now it’s time to do your lifetime planning. Click this (Cash Flow LifeLine & Three Bucket Savings Plan) and download your handy-dandy worksheet and map your future. It gets you started on your savings path that includes cash reserve, non-retirement savings, and retirement savings.

You will start taking debt payments (once you pay off balances) and convert them into savings and giving payments. Start by fully funding cash reserves (6 months of monthly expenses covered between bank savings and unused credit lines). Then start saving for non-retirement items such as cars, homes, education, dental, eyes, vacations, remodeling. Once your cash reserves are in place and some non-retirement savings are accumulated, then you can start to fully fund retirement. You should have assassinated your debt balances by now and could have more monthly cash flow to fund your future. Remember that you are likely to live longer than you think, so go crazy with your savings. And, for the record, savings IS future spending!

Plan to spend it all, but not right now!

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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