This seemingly simple task is nearly impossible for many of us to do consistently and successfully. But, if you learn the rule early and stick to it, you will be well on your way toward financial freedom. So, what is the Golden Rule? Spend less than you earn.
Spend < Earn
Many of you working with us already know the rule. However, be sure to share this essential advice with your kids and grandkids to help set them up for financial success.
If this is the first time you are hearing this advice, pay attention. Spending less than you earn is the first step toward creating a REAL financial strategy. If you spend more than you make the only place you can go is into debt. When your debt becomes unmanageable you lose your financial independence. This means you may have trouble affording to do the things in life you want to.
When you spend less than you earn you can have money to:
- Pay off debts
- Add to a retirement account
- Save for an emergency or rainy day
- Take vacations
- Buy a house
- Buy a new car
- Start a business
Regularly set aside money the same way you would pay any other bill. By doing this, you carve out savings from what you earn as if it were an expense.
“Never Spend Your Money Before You Have It” -Thomas Jefferson
Think of it as the cost of purchasing your financial freedom! As a rule of thumb, aim to save at least 10% of what you make.
What to Do if You are in Debt?
If you are deep in debt, get educated about your money and create a plan to dig out. You will need to find ways to:
- Decrease your expenses
- Maximize your savings
Online tools like First Step Cash Management, YouNeedaBudget.com, and Mint.com can help you monitor and control your cash flow. In addition, clients of Weiss Financial Group can track their spending in their Secure Client Website. I’ve found that these online tools really help you understand where your money is going so you can make informed decisions about your spending habits.
If you know anyone that could benefit from this advice, feel free to share this video with them. Good luck on your journey toward financial independence.
For more financial planning tips, download my free report: “8 Steps to Organize and Optimize Your Financial Life”. Thanks for reading!