Track your money spending
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Track your money spending

By Darren Barr-Engstrom  

Where are you being unconscious about spending money month to month? 

After a week of tracking all your expenditures, your next homework is to figure out where your money is going on a monthly and yearly basis.  If you were to look at your expenses and STOP assuming that there’s nothing that you can cut back on, what would be possible?  Remember your vision, your dreams?

Our culture assumes that price is set in stone, but what if you were to assume that anything of your expenses is negotiable or that there might be a less expensive alternative out there? Let me give you an example:  Most people assume that the interest they pay on their credit cards is set in stone, unless they have a special introductory offer.  I helped a client negotiate the interest rate on his credit card to 1.9% and thereby save money he’d otherwise pay in interest. 

Here is what another client found when she did her own financial audit:They were spending over $10,000 each year on food!  That included groceries and eating out for a household of 4 people. They led busy lives and found that it was easier to eat out for lunch each day and also often for dinner too. By shifting the priority from convenience to their long term financial health (as well as personal health) the family made a conscious decision to do more grocery shopping and plan their meals for the week (including making sure that everyone had packed lunches each day).  By becoming aware of where their money was going and making a conscious decision to save for the future, this family was able to save thousands of dollars a year by changing how they spent money on food. 

This is just one example, but every little bit adds up. 

Start looking at how and where you spend your money over your lifetime! 

You can apply the same principle to buying a car.  If you are someone who has to have a new car every 5 years, you will always be making car payments throughout your lifetime.  If you buy a $20,000 car every 5 years from age 25 through age 65, you would purchase 9 cars and spend over $180,000.  If you took care of your car and drove it longer, say 10 years instead of 5 years, you would avoid $80,000 of car payments.  You would then only buy 5 new cars and spend $100,000 over your lifetime.  How much do you think you could earn if you invested the $80,000 you would have thrown into car payments? 

If you can’t seem to give up a bad habit (such as smoking cigarettes, but certainly not excluding any other habit that just crossed your mind), calculate the lifetime price tag.  Let’s say you smoke a pack a day, $5/pack, that’s $35 each week, roughly $140 each month, and $1825 each year.  Over 10 years smoking will cost you $18,250, and over 30 years approximately $55,000.  (That’s not to mention the higher cost you’ll pay in health insurance coverage, life insurance, as well as the probability that you will be sick more often and your life expectancy is lower.)  If you were to invest $1800 each year for 30 years in a tax deferred account (such as 401k or IRA) with an 8% return, then you would have approximately $222,000 over 30 years!  So what will it be? A loss of $55,000 or a gain of $222,000 over the next 30 years?

Where can you stop spending a few dollars here and a few dollars there so that it adds up to something huge, something you thought of during the vision exercise?


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