We all want more money, but how can you make that happen?
First make a list of why you want more money. Be comprehensive and make sure you don’t leave anything out. Dream big and write down as much detail as you can so when you refer back to your list, you will be reminded of all these wonderful things. Do this now.
Second, write down all the income sources, assets and other resources you have available to spend on this list. Remember one of your assets is time, time to work extra hours, and time to get a better education and improve your ability to make more money.
Third, subtract the money you have from the list of wants and see if you come up short. This is the amount of money you need to find, learn how to earn, or acquire by selling an asset.
Let’s solve this money shortage problem right now. In the illustration above let the circle represent all the money you will ever have in your lifetime. Now you don’t know how long you will live, but just let this circle be the total amount of money you will have. Don’t be critical of yourself for past mistakes in investments, don’t deride yourself for not getting more education, and don’t get depressed, just stay focused on this activity to the end. I promise you will soon have more money.
Since this circle represents ALL the money you will ever have, why not spend it? Use your list of wants and spend your money. Take a slice of the circle and spend it on food and housing. Then do the same for medical and dental expenses. Spend some for vacations and fun activities. Don’t use a monetary figure, just a percetage, like 1.5% for example. Slice up your total money supply pie until it is all spent. Don’t forget transportation costs and travel. Now sit back and examine the money picture you have just drawn. Remember you can have anything you want, you just can’t have everything you want. So if you are a physician and will make $9,000,000 over your working life, you will not be able to spend more than that much money.
Your action item now, something for you to do immediately, is to take your “pie of money,” totaling all the money you will ever have, and spend it is such a way as to have a surplus and accomplish the essential goals of your life. Don’t just spend it all, spend it so as to have a surplus. Doing this little exercise will help you see where you are spending money foolishly or help you see what you may need scale back on so that you can have a small surplus each month.
Here are three case histories to put your “pie of money” into perspective in terms of creating a surplus: The first case study is about a schoolteacher who lives in the mountains of Missouri making $23,000 annually. She has debt and saves $300 each month. The second study comes from Florida where he is a plastic surgeon making $100,000 a month, but has over-committed on leasing his building, equipment, plane and automobiles, so when he was called out of military reserves to serve a one year commitment in Afghanistan (making $29,000 a year), this forced him to have to file bankruptcy. The third case history is a retired 87-year-old woman who lives in Stockton, California successfully living on $1,022 a month. We can see from each of these stories that it matters not how much you make but what you do with your money that counts. The school teacher isn’t making much and has debt but she still manages to create a surplus every month so she can save $300. The doctor is living large and has now lost that massive income on foolish living. He could have amassed a huge surplus by now but has spent it all. The elderly woman on a fixed income is managing her money by being smart about the way she spends so she has money to live on. Donald Horban taught this essential concept:
“We don’t need to increase our goods nearly as much as we need to scale down our wants. Not wanting something is as good as possessing it.”
Our financial peace of mind is to learn that a rich person is not one who has the most, but one who needs the least.
Don’t be discouraged, even though in my experience spending all your money on paper so you can see where you lack a cash surplus will be the hardest thing you will ever do. Don’t procrastinate, create a circle representing your entire income of money and spend it. Money is not the most important thing, but if you don’t have a surplus of it when you need it, it becomes really important. I wish you all the very best! peter@moneymastery.com.
