I don’t know about you, but I’m not one to give a bunch of unsolicited advice. Double that when it comes to money.
Since we make a living writing a financial blog, I’m sure that sounds weird…but it’s true. On the blog, it’s cool. You’re here to read what I have to say, so it’s an understood relationship. In real life, it’s not quite the same. I’m always available to help, but I’d rather not muddy the waters of friendship unless I’m asked.
Most of my friends have a pretty good idea of what we do, and they’ve seen how often we travel. Naturally, that leads to lots of questions about credit card rewards or travel tips, which is awesome! We love helping everybody find ways to afford their bucket list travel dreams. But a few weeks ago, I found myself in a different situation. While we get emails asking about budgeting and money all the time, a good friend actually sought me out and asked me to take a look at their finances.
How Much Are You Spending?
Frankly, I was honored (and humbled) that he sought me out for advice. This gave me the chance to really help somebody who I cared about, and I was excited to get started. I started by asking him if they knew how much they were spending, if they were on a budget, and what it looked like. Before I even asked the question, I already knew the answer.
See, like so many others, my friend and his wife are struggling to save. They are making plenty of money, but – at the end of the day – they have nothing to show for it. And, they’re not alone. It’s a middle class affliction that probably affects the majority of the people both you and I know. Heck, that was even us once!
People may look like they are doing well, but looks are often deceiving.
Learning to Spend with Purpose
Back in the day, we blew through money like it was contaminated with the Zika Virus. The problem wasn’t that we were short on income. We were unable to save because we were spending without purpose. There’s nothing wrong with spending money, but when you spend without purpose, all the little things add up and become crippling.
Spending without purpose means you might blow through hundreds of dollars each month without realizing what you’re doing or seeing anything for it. $5 for gum here, $6 for drinks there, $12 for lunch…it piles up quickly. And all you get is a gut ache and a pocket full of receipts.
Over time, we learned to save on things we don’t really want so we can spend on the things that really matter to us. You know, trips to Europe, concerts in Denver, and taking the kids to their favorite events. I’d estimate that spending with purpose has saved us more than $100,000 over the last six years – money we’ve been able to use to realize our dreams. But, it didn’t just happen. We needed to make a change in the way we thought about money, and a few basic tools helped us do just that.
Tracking Our Expenses
To start spending with purpose, we realized we first needed to know where our money was going. So, we started tracking our expenses.
What we found shocked us and opened our eyes in a freakin’ hurry. We were frittering away over $1,000 a month on food…for just 2 adults. And, a lot of that was for the simple convenience of eating out. We also found hundreds of dollars a month that was just going missing, spent on small purchases that didn’t cost more than a couple bucks. By tracking our expenses, it became ridonkulously clear that we were wasting money on things that didn’t matter at the expense of the things that did.
Creating a Zero-Sum Budget
Once we knew where our money was going, we had to make some choices. We decided what was important to us, and we wrote it down. We created a budget.
When people hear the word “budget,” they instantly recoil and think that it is so restrictive. Frankly, they just don’t understand what a budget could mean for them. For us, it actually means more freedom. Tracking our expenses, deciding what is important to us, and budgeting for it has helped us to craft the exact life we want to live. Instead of being restrictive, it is the tool that allows us to do everything we ever dreamed of.
Look, being impulsive can be a whole heck of a lot of fun. But, when it comes to money, it can really destroy your earning power. Impulsiveness is the enemy of consciousness.
Planning ahead can have a huge impact on creating conscious spending habits. It forces you to think, “Do I really want this?” If you do, and you write it into your budget, there’s no reason you shouldn’t be able to afford it. The problems come when you start blowing money left and right without ever considering the consequences.
Deciding What Was Important to Us
In addition to showing us how we were wasting money, tracking our spending helped us to make some serious decisions about what was important to us. Once we dug into our spending habits, it got addictive. We began to question everything that cost us money. Is this important? Can we save by switching to something else or getting a better deal? Is this a need or a want, and where else could we use this money?
We work hard for our money. We pour our life force into our jobs every day to earn it. Why waste that money? Why waste your our lives on things we don’t even care about? That’s just silly.
Spending with Purpose Changed Our Lives
By using these tools and learning how to spend with purpose, our life has changed in almost immeasurable ways. It taught us that the amount of money we made didn’t matter. All we had to do was harness the power of our paycheck and we could get further ahead than we ever dreamed.
I believe that any average earner has the ability to craft the life they desire. They just have to learn how to spend with purpose.
What do you think? Has spending with purpose changed your life? Do you think anybody can do it? Let us know in the comments below!