Your financial goals have to be more than a dream. Hitting a financial target is a mission. Need more motivation? Double-check your WHY. If one of your goals is getting out of debt fast, check out this article.
Welcome to the third part of this 4-part series: Achieving your financial goals faster. In part two, I take you through options to increase the INFLOW part of the budget equation.
What is INFLOW you may ask? I covered the equation of a zero-based budget at a high level in Part 1. If you want to review the components of this essential tool, read the section “Anatomy of a Budget”.
Well now that we have taken care of the INFLOW component, it’s time to optimize the OUTGO!
Achieve Your Financial Goals by Optimizing OUTGO
“There are plenty of ways to get ahead. The first is so basic I’m almost embarrassed to say it: spend less than you earn.” ― Paul Clitheroe
Are you ready to dig deep? Because this is where it gets really hard. It is difficult to work like a maniac to bring in as much INFLOW as humanly possible. But it takes a lot of motivation and strong forward-thinking to cut back on what’s going out.
I promise if you are invested in your WHY, you will not regret going the distance. It is time to Optimize OUTGO.
Do Not Envy
Have you ever seen someone and admired their appearance? Of course, you have.
Wow! Look at the shoes. Her dress must have been tailor-made. How many karats is that ring? Did you see the car he just pulled up in?
Sometimes it can go too far, sliding from the realm of admiration to envy.
Jealousy is wishing you were as well off as the person across the room. Envy is wanting to be that person across the room and, even worst, wanting what they have to be taken away from them. Jealousy is bad, envy is poisonous.
Envy sneaks up on us in ways it could never have done in the past. Social media has giving envy a new avenue to find prey almost every second of the day. Furthermore, everyone posts those amazing pictures of all the wonderful stuff they have and the places they have gone.
You can view these posts and either be happy for them or you can be envious of them. The latter happens far too often.
Fraudulent Financial Freedom
The sad fact is not that we get so worked up about someone else’s house or what they will think of ours, the terrible truth is that behind those gorgeous painted walls, within the perfectly tuckpointed brick exterior, and under those expertly stained hardwood floors is a dilapidated foundation.
Over 70% of Americans live paycheck-to-paycheck, though most of them do not look like it. They look good but do not be fooled, it’s superficial wealth.
If you think of 10 of your neighbors, there is a good chance that 7 of them have built their financial house on top of a faulty foundation. You may be able to spot one or two of them, but most of them look great on the outside.
This is not a subject to be celebrated. I know there are some people, who have allowed envy to eat away at them, may say, “I knew they weren’t doing as great as they look”. This is an unhealthy view of this serious subject. These 7 people need financial help and guidance. You may be one of them.
Your Plan has been Compromised
The reason that we end up buying things we should never have bought, to impress someone that we may never meet, is because of the way the Western world encourages this view. The media is saturated with all the things you “need” because “you deserve it”. The economy runs on spending on frivolous desires.
There is nothing wrong with having stuff. As Dave Ramsey says, “Just don’t let stuff have you.” The comparison game is alive and well, but you do not have to fall for it. Be happy for what your 3 better-off neighbors have. Be content with what you have. And help those 7 neighbors who have built their financial house on sand.
First, Love God, Provider of all things.
Second, Love your neighbor, because we are all family.
Third, Love yourself.
Once I began coaching, I started to realize that the 70% who are living paycheck-to-paycheck were not the only ones in need of help. I now know that 70% of the 30% may be living on less than they make but have large and increasing towers of debt.
They have a good income and have found solace in their salary and complacency with their credit. They often say to me, “I will always be in debt”. This may be the most dangerous lifestyle of all. Debt can be demolished!
Change Your Mindset
Life happens and every day I see someone crying because they were not prepared. We are not taught about preparing to enter the real world of personal finances in high school. Many of our parents did not talk about money as we grew up for various reasons.
Your brain could be filled with poor money habits you observed while growing up. Thoughts can be consumed with the media telling you what you deserve even though you don’t. Your mind may want to wander off to a land of spending for comfort and pleasure only to medicate the situation.
Let’s demolish this bad way of thinking today.
Now, just like I took you through 4 ways to Increase INFLOW in Part 1 and Part 2, I am now going to walk through the first of 4 ways you can Optimize OUTGO. I’ll cover the other three in the last part of this series.
Achieve Your Financial Goals by Staying in Control of Food Spending
Let me begin by saying, if you are in debt, this is not the time to eat out. You will save an incredible amount of money by cooking at home, packing a lunch, and meal planning.
Food is many times the #1 category I see in someone’s budget that is holding them back from leveling their debt is record time and achieving many of there financial goals.
If you are spending more money on food then you are on housing costs, you need to make some deep cuts immediately. That was the situation we found ourselves in.
My wife always talks about shopping your cabinets, cupboards, and freezer. She says, “many people have food that has been sitting around and will soon expire, but they are too lazy to cook”.
Shopping must be strategic
Don’t wander into a grocery store without a list and without a plan. Grocery stores have done tons of research and know where to place every product to entice you into buying.
Use coupons and the sales ad at home by implementing a meal plan. Plan to purchase some items at discount stores, buy some products in their generic brand, and understand where bulk packaging can save big bucks.
Making a list before you set foot inside the store can save you time and money. But, you must stick to the plan. If you see something that is not on the list and it is not a true need, shop for the rest of the items and come back. Is the urge to buy still as strong?
My clients who have put these strategies to practice have cut their grocery bill in half.
Shopping smart is imperative. I want to give you a resource that will help you get some ideas for meals that can go farther. My wife made the set of recipe cards for you.
Comment below with the ways you have found to shop smart.
In the next (and final) part of this series, I will cover 3 more categories of OUTGO items you need to optimize.