Taking the First Step to Financial Freedom

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“It’s not your salary that makes you rich, it’s your spending habit.” – Charles A. Jaffe

I’ve been reading a lot of finance books and articles since we made the decision to really focus on achieving financial independence and the biggest takeaway is the most obvious: spend less than you earn.

Sounds simple enough, but in practice, we all know how tough it can be. We’ve been raised to consume, often without thinking, so how do we suddenly hit the brakes or even reverse our spending habits to achieve this goal?

Track Everything You Spend, When You Spend It

For me, the biggest barrier to living within our means has always been awareness. Even with 8 years worth of data I still felt like I had no idea where the money was going. Looking back each month I could see the numbers, but still felt disconnected.

Surprisingly I didn’t have to change much to turn this around. Previously I would let receipts pile up and reconcile them sporadically. This is where the disconnect happened. By not recording my spending when it happened, there was no real connection between the outflow and its purpose.

It felt like the money would just vanish because, by the time I recorded it, the purpose behind the spending was gone.

The simple adjustment I’ve made over the past couple months is to simply record my spending when I spend it.

The purpose of this was twofold. First, it helped me associate the spending with its purpose. I have a better understanding of where the money has gone because I can (vaguely) remember each time I’ve taken a little step to the side or sat in the parking spot to record my purchase.

Second, it’s helped me build a habit of recognizing when I spend money. In trying to adjust my awareness I’m really trying to make sure every purchase is a conscious decision. No more zombie-like spending, buying stuff without even thinking or noticing.

My Results

In addition to tracking my spending at the point of purchase, I also made it a point to check my category balances before the purchase.

These two adjustments have made a noticeable difference in my purchasing habits. I’m not only more discerning about my purchases, but establishing these habits has made me more conscious of how every purchase supports or opposes our family’s values and priorities.

I know that any spending is being made in full awareness now. I’m not always happy about the purchases I’m making (I’m looking at you rising gas prices), but I know they align with our family’s priorities.

A Secondary Benefit

Since becoming more intentional in my spending I’m also becoming more conscious of what things cost. This has helped me take advantage of deals as well as recognize when something advertised as a “sale” is actually the same price as it was last week. Stores like to play to our pricing ignorance by marking up prices just before putting items on sale so double check those “deals” you think you’re getting.

Overall the simple act of recording my spending at the point of purchase has helped me become more confident in my choices and satisfied with my decisions. I challenge you to give it a shot and report back with your findings. Let me know if you notice any changes in your behavior after you’ve built the habit.

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