Only You Can Prevent Financial Fires

March 24, 2015

Not to date myself, but I used to love the Smokey the Bear commercials about how, “Only You Can Prevent Wildfires.” Well, when it comes to financial fires, the same rule applies. Although everything around you seems like it is out of your control, there are things within your control that you can do.

Power of the Budget

You may not feel like you have control over how much you make, but you have some control over how you plan your spending. You can choose to give every dollar a name and account for every penny you spend in your account. It may not be much, but it still deserves a name. When you have a plan for every penny you earn, you start to feel power over your finances and some people even start to feel a sense of peace. Websites like Mint.com can even automate this process for you.

Power of Controlled Spending

You do have some control over what you spend money on. You can control how often you eat out, how big your cable bill is, or whether you buy an expensive cell phone. You can also control your lifestyle. I had friends that were determined to have a gap between what they spent and what they make so they made the choice to live in an area with a lower cost of living. Although not everyone can do this, others can downsize if needed.

Power of Little Changes

Do not underestimate what a few small changes can do. It could be as small as a commitment one or two days a week to being frugal. On those days, you bring your lunch to work, make no stops for coffee and/or spend as little as possible.

Two days of no coffee at Starbucks can save you $8 week, $32 a month. Two days a week of bringing lunch to work can save you $20 a week, $80 a month. Those small changes would free up a total of $112 a month that can help add an extra $1344 to an emergency fund over a year, pay down a debt, or save for a vacation.

Power of the word “No”

I used to struggle with telling friends and families no when they wanted to do an activity outside of our budget. We quickly learned to say no to going to an expensive restaurant for someone’s birthday. If you find yourself struggling with this, find the nearest two year old and observe them for about an hour. Heck, they say no so often you think it is the only word they know. (Please note the joy on their faces as they are saying no.)

Learn to also say no to yourself or the inner two year old that wants something “NOW.” It is not easy, but remember that every money choice is either pulling you towards your goal or taking you away from your goal. The decision to buy an item on credit is chaining you to that credit card company so you are working harder to not only pay for the item but the interest as well. The money that you are spending on credit could be earning money so in essence, the financial institution would be working hard to make you money instead. It is your choice what side of the equation you want to be on.