Spending guidelines for financial freedom? Really? This seems unreal. With proper spending guidelines, and by God’s grace, people will spend only for needed items. they will spend less.
Consumers continue to fall deeper in debt, while merchants contrive clever schemes to get them spending more. Without a solid offensive plan against merchants, consumers will fall prey to stores’ conniving tricks.
Three Key Spending Guidelines
Here are three spending guidelines you can follow to defeat merchants:
- Spend only after you know the opportunity cost
- Spend only after you realize the effects of debt
- Spend using a money map always
Spend Only After You Know The Opportunity Cost
Before you go to the checkout counter ask this question: By spending these dollars, what will I sacrifice—not be able to do? That’s the opportunity cost. If you planned to buy two tires in the next three months, but found a new phone or other grown-up toy irresistible, will purchasing this toy prevent you from doing something you need, want, or planned to do, such as buying the tires? Get in the habit of asking this question and you will be surprized how often you leave the store without the coveted item.
Spend Only After You Realize The Effects Of Debt
Most people see the cost of debt as the interest rate. What about the emotional stress that lingers for years as you try to liquidate the debt? When you start to checkout and someone tells you that you could save 10-20% if you took a store credit card, remember these three points.
- You don’t save when you spend.
- The interest rate on a store credit card is likely to be 29.95% after tax, 42.8% before tax. Therefore, you need to earn around $42.8, pay taxes of $12.85, to pay the store $29.95, with a 30% tax rate.
- You will spend 30% more with the card than if you used cash.
Spend using a Money Map
The Money May is a key budgeting worksheet. It is a portion of your budget you travel with. It’s not a complete budget.
Have you ever wanted to take parts of your budget with you when you go on your spending trips? Over the next week, you want to go to the mall to buy clothes, birthday and Christmas gifts, and bulk toiletries, which you budgeted. Then again, you plan to go on vacation and do not want to overspend your budget for transport, food, shelter, and recreation.
The Money Map will help you spend for specific planned items at pre-determined prices. The Money Map system will give you a separate worksheet (your map) with expense categories and budgets to help track spending on the road. Don’t leave home without it.
Try these three spending guidelines. You won’t regret it.
© 2014, Michel A. Bell