Control your money; Control your life.

Jared rice | Unsplash.com | Control your life, Control your money.

What does this mean?

Money is like the call of the sirens in Greek myths. The sirens call lures you away from happiness and success and can turn you into a ravaging beast willing to follow the lure of money no matter the cost to the lives of friends or acquaintances. But there is an alternative. Control your money throughout your life.

The first and most challenging thing to do is live within your means.

The money equation is money in (income, salary, paycheck) has to be more than money out (expenses, expenditures, spending, purchases).

Money In

As we discussed in "Seven Money myths" and the "seven truths about money," you get income by exchanging your time for money. Some people make a lot for each unit of time they work, and others make less. It doesn't matter which group you are in. You have to control yourself so that you spend less on the goods and services of others than you receive as income to win the money game.

Money Out

Money out is what we pay for goods and services to others. So the best way to think about your spending is to categorize it into needs, wants, and discretionary.

Needs

Needs include such expenses as

  1. Taxes
  2. Housing
  3. Food
  4. Water
  5. Transportation
  6. Clothing
  7. Education
  8. Saving for emergencies and retirement

Wants

Wants can include everything you list in answer to the question I want to have.

  1. The latest fashions
  2. The newest and biggest TV
  3. I want the most recent computer each year
  4. I want a new car every two years
  5. I want to attend every theater and concert.

Controlling our money

To control your money, you first have to fight the influence of others and control yourself. What others say should not influence your decisions about how to spend your money. Change must start within you.

Basic decisions

  1. Income is less than expenditures.

How to gain control no matter what your current situation

  1. Keep track of the income and expenditures.
  2. Then look for places you can make changes to either increase your income or decrease your expenditures. This step requires you to be merciless in defining your needs and wants.
  3. Build into your life the habit of paying attention to where your money goes.

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