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The ONE Thing You Must Do to Reach Your Financial Goals

September 8, 2009

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Why do we always want a silver bullet or a magic formula for everything?

Is it because we’re lazy?  Do we simply want to find the easiest way to reach our goals? 

Maybe it’s because we want to check things off our lists so we can move on to the next item.

When it comes to our finances, most of us (myself included),  want to turn things around overnight and move on. 

Unfortunately it’s not that simple. 

Wouldn’t it be nice if there were a silver bullet for our finances? 

 

Photo by: Benefit of Hindsight

What if I told you there actually is one when it comes to handling your money, but it may not be what you think. 

No, I’m not talking about winning the lottery, or debt consolidation or some magic potion that wipes out your credit cards and max funds a Roth IRA for you.

So what is it?

The ONE thing you must do to reach your financial goals, the silver bullet for personal finance is this: 

Spend less than you make!

WAIT!  Before you say, “That was a letdown.  Of course we have to spend less than we make, I’m not stupid” continue reading…

You’re right!  It is simple and no you are not stupid.  But you have to admit, we are prone to ignoring the simple things because we think we’ve mastered them. 

I am constantly amazed at the sheer number of people I run into and talk with that have no idea how much they spend on a monthly basis.  Some can’t even tell you what their take home  pay is. 

They usually speak in general numbers and broad strokes. 

There’s a great story about Vince Lombardi, the legendary coach of the Green Bay Packers, who being frustrated with his team’s performance said as he picked up the pigskin,  “Gentleman, THIS is a football”. 

He went on to talk about the basics – blocking, tackling, and sacrifice.

Back to the Basics

There’s a great lesson to be learned with our money.  Once in a while we need to pause, look at our situation and go back to the basics to see how we’re doing.

The fundamentals like “spend less than you make” aren’t so basic that we never look at them again.   It’s easy to get off course and we need to recalibrate.

It doesn’t matter how much you make, if you spend more than that you will be headed for financial disaster. 

This is happening to someone I know who makes more than some of us could imagine making in several years, and each time I talk to him I remind him he’s got to start spending less than he makes, and he inevitably reminds me of this basic principle.

Spend Less or Earn More

Some of you may say well I’ll just earn more than I spend.  That’s fine.  I encourage you to do that.  But that isn’t always easy to do.  Getting spending under control requires more sacrifice, discipline and self control. 

Get your expenses in order AND increase your income and you’ll be even better off.

Simple But Not Easy

Unfortunately, the silver bullet for finances is very simple, but it’s not easy.  It still takes time.  It still requires effort.  And it still won’t happen overnight. 

But I can guarantee that if you spend less than you make and start planting seeds of saving and giving, it won’t take long to start seeing the fruit of your labor. 

It’s time to get back to the basics and revisit how much you’re spending versus how much you’re making.

How About You?

Do you ever get off track and finally realize you need to get back to basics? 

What are some ways you “recalibrate” your financial planning efforts?

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