Discipline your spending
- 2003 31 Oct
- Know the costs. Know what it costs you to live, then live within your means - in other words, make a simple budget. Honestly and accurately list the areas of spending and income. Don't spend what you don't have (practice saying, I can't afford it).
- Live frugally so you can invest extravagantly. In your early years of making money, live as frugal as possible in order that you invest as much as possible. Learn to make the most of sales, used things, and bargains. Remember, every dollar you let go through your fingers is a dollar you could have invested in a savings account or mutual fund.
- Seek advice from the experts. One of the easiest ways to lose money is to invest in something you don't know much about. Solicit the advice of experts who have experienced what you want: a new car, the right college, musical instruments, or summer camp.
- Beware of borrowing. If you use credit cards, think of them like a checking account. Be sure money is available to pay the bill in full when it comes at the end of the month. Borrow only for things that will increase in value. It is a losing battle to borrow for things that depreciate in value (cars, furniture, clothing, and vacations).
- You can't win them all. Everyone experiences some financial disappointment (you bought a dishwasher that doesn't perform as well as you had hoped, your new car ends up with some scratches and dents). Decide to learn from your setbacks and accept them as a part of life.
- Don't spend money you don't have. Discipline yourself to defer instant gratification in order to pay your obligations. Don't take an expensive ski trip, then wonder how you will pay the rent.
- Don't spend your inheritance. Usually people who receive a lump sum of money (inheritance, legal settlement, win the lottery, collect insurance, etc.) blow it. Seek the advice of a trusted accountant and take into account taxes you must pay. Give your tithe to God, put some of the money into a secure savings program you can't touch for at least a year. Make a long-term investment (for college, or the down payment on a house). Pay off any long-term indebtedness you may have. With what's left, spend on things you want to buy.
- Don't turn down what's free. Never hesitate to ask a person, What are you going to do with that? Are you just going to throw it away? Do you mind if I get that out of your trash? It can become valuable to you later - either for yourself, to give away, or to trade with someone for something you could use. Just don't become a packrat.
- Determine why you want money. Money should never be the goal but a means of accomplishing something of value. Your value is not how much money you have.
- Sleep on your decision. When you are thinking of making any investment, take 24 hours to sleep on it. Think about the investment non-emotionally. During that time consider other options, beginning with whether you need it in the first place.
- Start saving money now. People think that in order to save a lot of money you have to make a lot of money. In reality, acquiring a substantial sum of money requires only two things: time and the discipline to work toward the goal consistently.
From The On My Own Handbook, (c) 1991 by Bobb Biehl. Used by permission of Victor Books, an imprint of Chariot/Victor Publishing, a division of Cook Communications, Colorado Springs, Colo. To place orders call toll free: 1-800-437-4337.
Bobb Biehl is president of Masterplanning Group International, a consulting organization, and serves on several boards, including Focus on the Family. His principles have worked for business presidents, senior pastors, and executive directors. Bobb and his wife, Cheryl, live in Orlando, Fla.