Snapping up money is so nice: sleeping longer and taking a cab, drinking coffee on the way to the office, spending a fortune at an Online Roulette Spielen website, ordering a hyped-up gadget online, having an invigorating weekend shopping run… But this ease is deceptive. Giving in to the impulse, we lose something more important – for a year, we live in a rented apartment, we put off our dreams, we can’t solve our health problems. We think that spending without thinking makes our life more comfortable, but in fact, the opposite is true. If we want to have enough money for a life that we really enjoy, we have to learn to count it and plan.

Step 1: Write Down Your Expenses

First, it’s important to understand how profitable we are: how much we earn and how much we spend. Keep a simple but constant record of expenses with the help of handy apps: CoinKeeper, Money Lover, Money On, ZenMoney, etc.

There is no need to be too detailed about expenses: it’s enough to write down “products” without listing them.

How to Make It a Habit to Account for Expenses Regularly

Accounting for expenses is as much a habit as any other. It takes regularity, persistence, and a little time to form it. Charles Dahigg advises triggering the habit mechanism with a so-called “habit loop” involving a signal sent to the brain, a pattern that triggers habitual actions (physical, emotional or mental) and a reward.

You return home in the evening and sort through your shopping bag. You see a purse (a signal to write down expenses). You follow the pattern: you open a personal finance app, you enter all your expenses into it and get the reward – the satisfaction of keeping your finances in order and understanding how much money you have and what you spend it on. After 2-3 weeks, which is how long it takes to establish the habit, you will do it all automatically!

Fix your expenses honestly and without estimation.

Did you buy a bottle of wine and a cake in the evening? Left half your paycheck at a garage sale? Just write down how much you spent. Avoid self-blame. Otherwise, you’ll be tempted to hide something harmful. And you won’t see the real picture of expenses.

Step 2: Establish Spending Categories

The first step is done. You regularly write down all your expenses. Now let’s organize them: let’s understand how often we spend money for different needs, which expenses we cannot do without, and which can be canceled or reduced.

Step 3. Analyze Spending

So far, we have only been writing down expenses. But it is possible to record them for years and not change anything. Our task is to figure out how to spend less and start saving.

Calculate how much money you spend each month on all of the expense items from step 2. For expenses that happen less than once a month, spread them out by month.

Paying $600 every 6 months for a Spanish course? Divide $600 by 6. You are spending $100 a month on foreign language classes.

Now you can see your average expenses for the month as a whole and for each item individually. Looking at the results, answer two questions honestly:

• Do I like the way I spend my money?
• Can I save money with this spending?

If you answered yes to both questions, you don’t have to read this article to the end. However, if you feel that you have spent some of the money foolishly, and there is nothing or too little left to save, move on to the next steps.

Step 4: Plan and Follow the Plan

When we plan a budget, we decide how to most effectively spend the money we earn. When planning, it is important not only to think about today, but also to consider various force majeure events that happen in everyone’s life.

Planning for expenses is not at all scary or difficult. Even in ancient times people did it.

Step 5: Allocate the Rest of the Money

If with the mandatory costs everything is clear, then with the optional costs everything is much more complicated.

How do you pay off your mortgage prematurely if you want a new dress or two? What if you invest in a cool project, and then pay off all your loans?

Debt first. Then everything else.

Even the most useful loan pulls a lot of money out of you: the purchase amount itself plus insurance and interest. So if you can refinance a loan, refinance it, if you can pay it off early, pay it off. And only then start investing.

Make a “debt repayment” line in your budget. Once you have taken care of the loans and other obligations, replace it with the “investment” item.

Gave up debt? The first step to financial freedom is taken! Now you need to accumulate a “safety cushion” that will bail you out in case of life’s twists and turns.

If you are an in-demand professional who is not burdened with debt and family, enough “cushion” that covers your three-month expenses. But if you have children, Tech House Value a non-working spouse, elderly parents, and additional financial obligations, you need at least a six-month supply of money.

The safety cushion should be readily available, for example, in a deposit that can be closed quickly.

Step 6: Allocate a Monthly Amount for Accumulation

Debts have been paid. There are savings for emergencies. Begin planning for long-term investments – those that will help you save for your dreams and become a source of passive income.