Armchair Millionaire Community Bulletin: How to Be a Smart Spender

When it comes to building financial security, what you earn actually matters much less in the long run than what you keep. To make sure there always the money you need to invest, you need to take a different approach to spending.

New York, NY (PRWEB) July 13, 2004 -- In our abundant society filled with consumer goods (and advertising promoting those products), it's easy to let spending get away from us. Things that were considered luxuries even just a few years ago (cell phones, for example) are now considered by many people to be necessities.

You basic challenge in getting your spending under control is to be able to distinguish your wants from your needs. When we asked members of the Armchair Millionaire community how they do this, we heard many strategies. Here are just two:

Use what you have. "To separate the wants from the needs, I ask the question, 'Do I have anything else that will do the job?' If I do, it's probably just a 'want.' For example, a new car would be terrific, but my 13-year old car is running just fine." --Julie M.

Separate 'needs from 'wants. " I use these guidelines: 'Needs are paid for with cash. Wants are paid for with credit.' I find that the things I need are easily handled within my budget, but the things I want generally require plastic assistance. Something about using that as a mantra, and thinking of the possible interest I'll have to pay makes me not want as much." --kirkisms

It's easy to have no money left at the end of the month even if you have a good income. When it comes to building financial security, what you earn actually matters much less in the long run than what you keep. To make sure there always the money you need to invest, take a different approach to spending. My guide will help you become a wise spender.

The Armchair Millionaire's Guide to Smart Spending

Assess where you spend. Commit to tracking all your purchases for one month. It can be a chore, but the results will be eye-opening--you'll know once and for all where your money is really going. If you're like many people, you spend far more on small purchases--like the daily latte--than you ever would have imagined.

Find the money. With your better knowledge of where you're actually spending, you'll be set to find that "extra" money you'll use for investing. It's not likely to be $100 all in one place, but a few painless bucks here and there.

Set priorities. This is when you get down to the nitty gritty of deciding what you really need and what your really want. A secure retirement is a need. A new car every year isn't. Arrive at a clear understanding of how you define each. This definition will guide your everyday spending decisions.

Create a spending plan. List your fixed expenses (your needs, like paying the mortgage and saving for retirement) and discretionary spending (your wants, like that new DVD).

Shift spending as needed. If you want more money for one thing, you'll need to spend less somewhere else. If there's not enough to fund your needs, shift money from your wants.

THE BOTTOM LINE: Smart spending can lead to big savings, and big savings will lead to financial security in the form of a solid investment portfolio. The right steps to guide your spending will ensure that you have the money you need to invest for the long term.

THE ARMCHAIR MILLIONAIRE WEEKLY SURVEY: Are you on track to having the kind of retirement you want? Log on to www.armchairmillionaire.com and let us know.

Lewis Schiff is a contributor to CNNfnMoney.com, the Web sites for CNN and Money Magazine. His newest report, "How to Know When You Are Rich," is now available at www.armchairmillionaire.com.

CONTACT INFORMATION:
Lewis Schiff
Armchair Millionaire
877-833-2823
http://www.armchairmillionaire.com

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