Spend less than you earn.
That’s it, end of story. Ahh, if only it were that easy! Like so many other things in life, most of us know what has to be done. We just don’t completely know how. But still, spending less than you earn is the only real rule there is in managing money, and its pretty straightforward.
The rule is pretty universal. If you and I consistently spend more money than we bring in from our jobs, we’ll soon be in debt and go bankrupt. If a business consistently spends more money than it brings in from its products and services, it will go bankrupt. Even a non-profit business. If a government always spends more than it brings in via taxes, it too will eventually go… raise taxes and print more money. Oops, guess the rule isn’t completely universal! But still, spending less than you earn is crucial to our personal finances.
But how? That’s the hard part, and its hard because numbers are not your friend. Numbers are exact, relentless, and unforgiving. You and me? Oooh, shiny new stuff!! We may remember spending 35 dollars, but then the numbers actually add up closer to $100. We may have forgotten, or not even realize, that we were over budget last week. But your bank didn’t. No, spending less than you earn is not easy.
Unless… you have a budget and track your spending. That’s the key to spending less than you earn. What does your bank or credit card do whenever you buy something? Do they look up for a minute to think and say yeah you need this, go ahead; or do they do actual math with two numbers and approve or deny accordingly? The One Number Strategy gives you exactly one number to check before you spend money.
The one money habit you really need is to track your spending. That’s the main reason some people use only cash, it tracks itself. Debit and credit is a little trickier because there is nothing in your hand to count. Find your one number to focus on weekly and track every expense against that.
