Succeeding at money boils down to this: Spend Less Than You Earn.
That’s it, simple right?
If you do this one thing well, you are on your way to your fantastic future.
If you want to improve that future, you can either:
Earn More or
Or you can do both
In the blogosphere, there is an earn more crowd (hello my entrepreneurial, side hustle friends!) and there’s a save more crowd (hello my frugal friends!).
Whichever approach feels right to you, the important thing is to grow the gap between what you earn and what you spend. This not only allows you to save or pay down debt now but it also decreases the amount of savings needed to fund your future dreams.
I attacked this equation from both sides.
Early in my career, when I had the time and energy for a side hustle, I had accounting clients in addition to my day job. These brought in about $400 per month (which was real money in the early ’90’s) and were flexible enough that they didn’t impact my real job.
At the same time:
I didn’t spend money on crap that didn’t enhance my life,
I didn’t use debt to borrow from my future self and
when I did need to something, I looked for deals or bought used (I was a millionaire before I owned my first new washer and dryer).
OK, so you know what you need to do (cause it’s simple!): Spend less than you earn.
It’s likely the how that is tripping you up because the how is so hard:
Oh God, I need a budget, everyone says I need a budget.
Do I need to track my expenses? That sounds like a huge pain.
I should really try to earn more money, but I don’t have time to find another job let alone do another job.
I should call the cable company and get a discount, I HATE calling the cable company.
. . .
But what if you focused on the smallest possible action to get you to your desired result? This is how Author Stephen Guise suggests we overcome procrastination and perfectionism in his book Mini Habits. Listen to the Afford Anything podcast interview with Stephen on your next commute or walk–it’s only 23 minutes.
Focusing on one small action rather than the result allows you to make progress every single day.
Budget–today I’ll figure out what my income is
Tracking–I’ll write down what I spend today
Earning–I’ll google “side hustle” today and read about 1 idea
Cable–I’ll ask my partner to call the cable company today
Focus on one small action–break it down to the smallest action possible. One small action becomes two small actions and before you know it, you’ve reached the big, daunting result.
And don’t let your perfectionist self get in your way. There’s no “right” way to do any of this personal finance stuff. The right way for you is what works for you–that’s why it’s called personal finance.