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Lesson 5 The Percentages are in Your Favor The Key is Planning

Smart Spending – The Key is Planning
The key to smart spending is planning. It’s best to play your spending at least a year at a time. This is because there are many expenses that only occur once a year. Christmas presents, birthday presents, anniversary and graduation presents as well as vacations are examples of once a year expenses. When you know what your expenses are for a year you can simple divide by twelve to get your monthly expenses. Then when an annual expense comes up you will have already been planning for it for eleven months.

Let’s take a look at smart spending on a monthly basis. Write down how much you will have in income. Put your money through the four prosperity chambers. Save some in your financial independence account and some in your annual income account. Put some in your large purchases account. Give some away and put the rest into your smart spending plan and allocate it in accordance with your yearly spending goals.

I suggest you allocate the money that you start with to your basic needs; things like food, housing and transportation. Move on to things that are very important to you and work your way down to the things that are less important. Keep allocating until all your money is gone. If you run out of money before you run out of things you’d like to spend it on then you have to go back to the beginning and see if you can make any cuts in your previous allocations.

When you learn to ask yourself, “How can I accomplish the same goal while spending less money?” you arm yourself with one of the greatest smart spending tools. After you get used to asking this question you’ll probably be surprised at the creative answers you’ll get. Once you start to implement your answers, you’ll find you can do more with less money. And that, in and of itself, will leave you with more money. You can then save, invest, give away or spend your extra money.

You’ll find that when you plan your spending in advance you can spend it on what ever you want to. This is basically accomplished by eliminating impulse spending. But there’s a problem if you never allow yourself to enjoy an impulse. You’re likely to quit using the plan. So, plan to be impulsive. That way when you get an urge to be impulsive you can decide whether to spend or not. It’s also a good idea to set aside some money for unexpected opportunities.

When you get really good at this, opportunities will come your way. You may find a commonly used household product on sale. You’ll have money set aside for household expenses and you’ll be able to stock up and save money. Any time you get to the end of the month and have come in under budget, take a small amount for a prosperity party and put the rest into your prosperity accounts. Your saved money will be invested and start making you more money and you’ll be a little closer to having financial independence or taking a year off.

Your Valuable Possessions
Your Things Are Valuable - Your Valuable Possessions - Everyday Prosperity Your possessions are valuable. If they’re not valuable to you then they’re not yours; get rid of them.

Decide Now - Spend Later
When you know what it costs you to live every month (one year's expenses divided by twelve) you can decide in advance where you want your money to go. This is not an exercise in deprivation. You can spend the money any way you want to. You should have money for entertainment, celebrations and spontaneous spending. This is about treating your money with respect and responsibility and enjoying the rewards.

You can always adjust these accounts later. If you have $100 in your clothing account and you see a jacket that you have to have and it’s $150, you can adjust. Just decide which account you would like to take the money from. Would you like to take it from the fun account, the going out to dinner account, the vacation account or maybe some from each account? It’s OK. It’s your money, it’s your life, it’s your life energy, you can do with it whatever you want to.

When you start to take control of your daily expenses with Smart Spending you may find that just by paying attention you will spend less than you thought you were going to. If you do, then it’s time for a reward. If you thought you were going to spend $120 for food but you only spent $80 then take $20 and put in into your prosperity accounts. Say $4 in your financial independence account, $4 in your annual income account, $4 in your investment account, $4 in your large purchases account and have a $4 celebration. Really enjoy it. Celebrate the fact that spending your money wisely means you're retiring sooner, you're able to give more, your investments grow faster, you can take time off sooner and there’s still money left for a celebration.

That will leave $20 in your food budget. When more money comes to you put $80 back in the account, which will bring it up to $100. You now have twenty dollars leeway for next month. If you spend up to $20 more this month, you're covered and if you continue to spend $80 do the above process again putting $30 in your prosperity accounts and celebrate again.

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