S.P.E.N.D. Your Way to Financial Success

Make more money! That is the solution most people look to when they try to fix their finances. Let’s face it; there is no easy way to simply make more money, especially in this economy. Plus, that is the kind of thinking that leads to getting scammed or falling for ‘get-rich-quick’ schemes. Those do nothing but help some guru ‘get rich’ with your money. Well, if you cannot earn your way to financial freedom by making more money, then you can at least SPEND your way there.

By following the five simple steps in this acronym you will be better prepared to handle your finances and begin your path to financial freedom. You will not build wealth overnight, but these tried and true nuggets of wisdom will help you get there faster no matter your income.

S – Save for emergencies

P – Plan your purchases

E – Establish financial goals

N – Never let others spend your money for you

D – Don’t forget about non-monthly expenses

Save for emergencies: We know that emergencies happen all the time. The question is not IF something you own will break, but WHEN. Rather than allowing emergencies to break the bank or borrowing every time something unexpected happens, put money aside to cover emergencies. Plan for the unexpected by establishing an emergency fund.

Plan your purchases: You gain control by creating a budget and choosing where you want to spend your money. A budget gives you the insight to control impulse purchases and plan for big expenses like a used car or an upcoming vacation. If you do not plan your purchases, your money will go towards things you cannot even remember instead of towards those things you really want.

Establish financial goals: The easiest way to stay on track with your money is to remember why it matters to you. Just like a diet is easier to stick to when you have a goal such as an upcoming class reunion or a trip to the beach, it is easier to stay with the program when you remember your financial goals. By establishing financial goals you can make sure you are handling your money the way you want to as you move closer and closer to those goals. Properly established financial goals can also eliminate a lot of marital financial problems because you both have agreed upfront what you are trying to achieve.

Never let others spend your money for you: Salespeople are notorious for convincing customers to spend money on things they didn’t even know existed, much less wanted. They’re professionals. Family and friends are a close second. It is easy for others to tell you how great that car or house is or how much you would enjoy that extravagant vacation. Maybe they are right, or maybe their next bonus depends on getting you to spend your money. Don’t let others influence how you spend YOUR money.

Don’t forget about non-monthly expenses: Nothing is more frustrating than working hard to keep your money under control, staying disciplined, sticking to a budget, and then having a large bill come due that you forgot about. You are looking at your bank account in November then all of a sudden, “I can’t believe it! Christmas is December 25th this year! I don’t have any money set aside. Someone should produce a calendar with these dates on it!” Birthdays and anniversaries don’t change either from year to year so there is no excuse – well guys always have an excuse why they don’t have a gift – but they should at least have the money set aside. For more information see the letter ‘P’ for Plan your purchases.

Remember, it’s not how much you make, but how much you S.P.E.N.D.

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The three authors, Bill Pratt, Mark C. Weitzel, and Len Rhodes, are industry leaders in personal financial education. Together, they have a combined 75 years of experience in banking, economics, and entrepreneurship. Now, they teach thousands of students personal finance concepts and decision making skills, author textbooks and public press books on personal finance, and help schools develop innovative personal finance literacy programs. Recently, they were instrumental in developing a personal financial management certification program for leaders in higher education. The other books in The Money Professor series include The Graduate’s Guide to Life and Money and Extra Credit: The 7 Things Every College Student Needs to Know about Credit, Debt & Ca$h. Their books, lectures, and programs give students, parents, and educators the tools and knowledge to make good financial decisions all their lives.