Manage Your Money Series 2

Part 2: Clean up your expenses

Just like cleaning out your wardrobe we can clean up your expenses. How so? We all spend money on things that are not really necessary or also on things we are not really using. Instead we feel like we can’t afford a cleaning lady once a week which we really would like to get. In reality we could if we just spent more mindfully and more carefully in other categories. 

Sociologists have found out that humans have drawers for expenditures in their head. They will start an argument over a 10 cent raise of the price of the coffee in their favorite café but spend thousands on a car the next month without blinking an eye or 250 on their shopping spree thereafter. In the drawer “coffee” there is only space for 2.60 and not 2.70! Nope. But in the drawer “car” there is only a cap at .. let’s say maybe 50000, 200000 if we really like the fabric well. Insane isn’t it? Once we understand some of human mechanisms, it’s much easier to know this for our advantage. 

Ok so now you know what your expenses are, look at them closely. It is good if you have several months to compare. Most of the months, even the mere act of writing it down helped me become more conscious and mindful in my expenses. 

What to do now? 

There are several things you can now do and at the very least you can just continue writing down your expenses and observing yourself. That alone has a great effect. 

  • Set allowances for the monthly spending
  • Set allowances for certain categories
  • Set a minimum spending for certain categories. For example education. A month in which I don’t spend anything on education is generally a very stagnant month. I don’t evolve unless I invest in education. In “Eat that Frog” Brian Tracy suggests to use 10% of your annual income for education. Imagine: the richter you get, the harder it will be to spend that much on education. 
  • Cancel useless subscriptions: magazines… Netflix, etc.. 
  • Cancel second credit cards, unused bank accounts with high fees
  • Cancel unused bank debit cards if online banking is all you use. I am not saying you should stop all bank accounts and cards. No, just keep the ones really necessary. And one extra for extra savings. Some people swear by using separate bank accounts for each category in their life. One for savings, one for emergency savings, one for investments, one for day-to-day spending, one for gifts, one for repairs in their home etc. There is no right and wrong, as long as you are MANAGING and controlling your finances its great. But please don’t tell me you don’t know how many bank accounts you have and how much money you have on there. 
  • Cancel unnecessary insurances: Clean up! What is really useful and what is not? Life insurance? Necessary or not? Beneficial or not. How about the legal insurance (hint: you absolutely need one nowadays) 
  • Do you have a 401k? Think twice. Here is the latest info about pensions and who stole them from you by Rich Dad Robert Kiyosaki
  • Think about which of your expenses are really necessary and which one are not. Isn’t your chocolate addiction better transformed into that haircut you would like to get every other month?
  • Can you cut your food expenses for 100 EUR/Dollars for one month just to see where extra money would come from

–> We are not yet thinking about where new money is coming from. that will come later. Right now we are still in the cleaning out process. Be patient and throw out all things that are not necessary or not giving you results you want to see.

What do I mean by results? For example a tax advisor might cost much but in the long haul will save you thousands and thousands. You cannot afford NOT to spend on him.

Secret tip: 

Join one of Natalia Kobylkinas (https://www.kobylkina.com) legendary Money Marathons and clean up your finances in just one month. 

I can personally vouch for Natalias Money Mentality Marathon which I have already joined twice. During the first one I made over 900 Euros more and had to turn down lots of additional work I couldn’t handle. During the second one I added tremendous spiritual knowledge and made long lasting connections to other women around the globe./

Go to part one of the manage your money series