Becoming financially independent takes discipline, determination, and a lot of hard work. Adding unnecessary complexity doesn’t help.

Finances and Fitness

Getting your finances in order is fairly similar to dieting or exercise. There are a million super complicated ways to get in shape. But, every single plan that exists includes two parts: eat less and exercise more.

If you want to lose weight, you need to burn more energy than you consume.

If you want to take control of your finances you need to spend less than you earn.

For more detail, check out an article I wrote about how the shortest path to wealth is a boring straight line. Basically, don’t waste time on gimmicks that give you the illusion of progress. Instead, buckle down and make actual progress.

Do These Four Things

At its core, success in personal finance comes down to four things:

  • Spend less than you make
  • Have emergency savings
  • Have diverse investments
  • Rebalance regularly

If you do those four things, you will be okay.

All the other back-flips, cartwheels, and nonsense, are distractions. A rewards credit card will not make you wealthy. Consolidating your debt does not pay it off. Refinancing your mortgage to extend the payback period keeps you in debt longer.

Starting is Hard

Over the years I have found most people have difficulty starting for one of two reasons. Either they don’t know where to start or they feel hopeless.

Don’t Know Where to Start

So many people are stuck in a financial rut and they feel like there is no other way. Well, there is another way. The best place to start is the Undetailed Budget. Break your money into just four categories and you can start to take control.

Inside the Undetailed Budget you can see four areas to focus your energy.

What can you do to increase your Income?

Housing and Transportation are usually the biggest Recurring Expenses, and those can take time to bring down. Are there others that you can cut today? Reduce your cable package, cell phone plan, and eliminate subscription boxes!

Are you tracking your Personal Spending? I like to use daily so I can see where my money is going. It is my money and I am 100% in charge of how it behaves.

By increasing your Income or reducing your Recurring Expenses and Personal Spending you can finally spend less than you make. And, that means you can start Saving.

Feeling Hopeless

I have had this conversation with so many people over the years. They feel like they will never win financially, so why even try? It goes something like this: “I’ll never be rich, so why should I scrimp and save and suffer if it will never help? I’m destined to live paycheck-to-paycheck.”

The best way I have found to overcome this is to see what is actually possible. No matter how old you are, if you can find just a little bit every month, then you can build a significant Roth IRA nest egg.

Sticking with it is Hard

Unlike dieting and fitness, temptation can derail your financial progress in an instant.

If you break your diet and eat a whole pizza, you don’t actually undo all of the progress you’ve ever made. But, with personal finance, one trip to the car dealership or a meeting with a timeshare salesman can set you back to zero in a matter of hours.

No matter how well you are doing, all you have to do is spend everything you have once, and then you have to start all over again.

That’s why I recommend leaving room in your budget for cheat days. You are going to fall off the wagon sometimes. And, that’s okay. As long as you don’t stay off the wagon. You have to pick yourself up, dust yourself off, and get back to work.

You Can Do It!

I believe in you.

Taking control of your finances is hard. But, I believe you can do it.

Start with the Undetailed Budget. Find ways to boost your income or decrease your expenses in the short term. Later, when making new housing or transportation decisions, keep those expenses low. Track your spending.

Remember, you only have to do four things to win with money:

  • Spend less than you make
  • Have emergency savings
  • Have diverse investments
  • Rebalance regularly

If you focus on those, then all the other complicated nonsense will fall away.

Final Thoughts

Personal finance is a marathon, not a sprint.

There is no easy way around. Get rich quick schemes are all garbage.

But, there is no need to over complicate it either.

Instead, choose the middle path. Make meaningful progress, a step at a time. Find ways to slightly improve your situation regularly, over time. And, stick to it.

I hope this has been helpful! I welcome your comments with your thoughts and questions. And, don’t forget to subscribe to the newsletter to get notified whenever a new article is posted.

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