Erin and I have put a lot of thought and time into this and recently we have even done a challenge ourselves where we make conscious decisions to move our money into savings instead of buying something unessential (teas, coffee, lunch, dumb crap at walmart etc.) These things are what financial experts say are the most detrimental to financial success. Our challenge was eye opening, but I don't know if it's a long term strategy.
I have heard all kinds of ideas from clients and advisors who do everything from using cash only, writing it all down, setting aside money in different categories, having more than one account etc. What we have found has been the most effective for those fearless enough to try it -is (drum roll please)....Having it done for you!
You can argue that this strategy is a lazy one or a bit too passive, I mean you aren't really doing anything? I disagree whole heartedly. You are taking a stand against something stressful and overrated such as budgeting and placing it in the hands of a professional who is more capable of making unemotional decisions about your financial achievements. No one, no one likes to budget! We can see the sweat beads form on our client's brows when we even mention it. People pull at their collars and say "I didn't bring one..." aka I couldn't put myself through that kind of torture and Dancing with the Stars looked so much more inviting. We get it.
So what does "have someone do it for you" mean you ask? Well we propose that after we figure out your fixed expenses, we then take a percentage (usually aiming to start around 10% is possible) of what is left over and have it automatically come out of your account into a secret hiding place that you will have to call your sponsor for release of it when you relapse. Money issues must be treated like an addiction, because I know from experience - it is an addition of the worst kind.
Taking this money and investing it, or even parking it for a later opportunity or emergency will guarantee success. After all the Wealthy Barber says it best "pay yourself FIRST".
It's one of the most crucial habits to build - delayed gratification always means two marshmallows! (See video of the marshmallow experiment, super cute).
No one has yet to return to us after their 3 month probation and tell us that it's too tough, and we have not seen anyone after that period either. I know it works because I have done it myself.
The best part? NO more buyers remorse. You then know you have done your due diligence to your planning and your financial freedom, so you can spend the rest on $500 boots or a fancy TV if you have enough money left over. After all we just spend what we have in the account - shave some off the top and do what needs to be done = problem solved.
Again, this is no rinky dink passive plan for wussies. You have to feel the fear and do it anyway. You have to part with money temporarily in order to get off the hamster wheel. It seems scary at first, but remember it's not set in stone and we only do what we can do while ensuring we have taken all measure for it to be our best given our situation. Your plan is reviewed whenever you need and we can always make adjustments to accommodate.
I have seen people save on the most modest of incomes and that is inspirational. I welcome you to make a change today.
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