Every day, you get to decide your story. Are you going to get everything done that you set out to do? Work 10 hours, make the project deadline, clean the house top to bottom, and still make it in time for your kids baseball game? We all want success and productivity, but it is hard to consistently make the right decisions, every day. You’ll have a weak moment, and stop at Taco Bell instead of cooking something at the house. You will buy a big ticket item without price shopping it. Stuff happens.
it is hard to win every single day. Even the greatest teams and performers in the world have an off day. Jordan missed 26 game winners, 9,000 shots, and lost 300 games. And consistently making the best choice, every time, everyday is impossible. As humans, it is easy for us to take the easy way out. Sitting at home, watching television instead of working on our side hustle. Leaving the dishes in the sink, because you can just get them tomorrow. We all fall short.
This is especially true in finance and budgeting. In America, you are going to be assailed all freaking day with advertisements, and opportunities to consume. Even those used to paying the Iron Price aren’t immune. And even if you think you are made of teflon, some of those bullets are going to get through. Advertisers are paid billions of dollars a year to understand the human mind, and figure out how to get deeper inside your pockets. You can’t stop it altogether, because you will have an off day.
However, all isn’t lost.
The first step in budgeting is to build a system. And the best thing is, you don’t have to make good decisions hundreds of time a month. Utilizing systems can cut your decisions down drastically. The first step is to analyze your weaknesses. Lets say that every time you stop to pump gas, you go inside the gas station to buy a snack and a drink (Reese’s and Grape Fanta if you’re a cool kid, anything else if your not). Let’s say it’s five dollars to purchase the snacks, plus whatever you are spending on gas. If you gas up once a week, that’s $20 a month, or about $250 dollars a year, on something that you will never remembering missing.
So, being the smart dude or dudette that you are, you decide to only stop at the gas station in front of the grocery store, that doesn’t have a storefront (Gas stations in front of Wal-Marts, or Sam’s Club come to mind). Now, you can’t make the wrong choice! You cannot do anything but pump gas, because come on, are you going to walk all the way into Wal-Mart for that snack? Put that money to work for you, instead of spending it on something that you won’t remember in 30 minutes, and your finances can start to change. For example, let’s say you download the Acorns App, and put that five dollars you would have spent on snacks into an investment account. Now, that doesn’t sound like a lot, but once the money snowball is rolling, it is going to be hard to stop.
Putting this system in place, forcing you to make the right decision, will enable you to invest $5 a week that you ordinarily wouldn’t have invested. Assuming a 8% annual return, that amount would be worth more than $32,000 in 30 years, if you continued contributing. By making an incredibly small change and building a small system, you turn money you would never miss into an amount that makes a difference for you.
But, let’s take the example further, and challenge you to make real change.
Making Real Change
Let’s say you cleaned your financial closet, and examined your monthly expenses for things you don’t get much use out of. Perhaps you found a gym membership ($40 a month) that you never use, a National Geographic subscription ($10 a month) that you actually read about once a year, and a PDF Editor ($30 a month) that you signed up for to use at work, and never got around to getting reimbursed. Let’s say too that you told Comcast to shove it and pulled the plug, saving you about $120 a month. So, costing you about an afternoon’s worth of time, you saved yourself $200 a month. Roll this money into Stash, or a Vanguard account, and are saving an additional $2,400 a year, all for an afternoon’s worth of reviewing bank statements and canceling unused subscriptions. Invest this amount for 30 years, with an 8% return, and your investment account would have more than $300,000 in it. This isn’t cutting anything that matters to you, its just about being diligent, and cutting out the waste. No matter who you are, $300,000 is going to matter to you.
You have to always keep Cleaning your Financial Closet!
At The 1000 Lives though, we like to focus on the three biggest expenses; Autos, Housing, and Entertainment/Food. The good news is, building a system isn’t limited to the smaller expenses in your life. You can expand, and implement your systems for your biggest expenses. Take a look at your entertainment expenses. If you have a passion for going out with your significant other, or spending time with friends in a night out on the town, you can do that. But, if you have a problem with overspending, try using only gift cards. Plan ahead, know where you want to go. If you want to spend a night out at Applebee’s, you can go to cardcash.com and buy a $50 gift card for $40.50. Then, after you buy the gift card, take all of your money out of your wallet, bring only your license and gift card, and go have fun. Now, it is literally impossible for you to spend more money than you planned, unless you head to the back and start washing dishes. Get creative, and find what works for you. Implement systems, and use the savings to jump start your way to early retirement, or repaying debt.
I’ll leave you with this question and challenge. First, what systems do you use to save money monthly? And what problem area with your spending will you fix this week by implementing a system?