Steps to Financial Security (Part 2)

4) Trim Expenses

We live in an "Era of Consumerisma". That is, we order our lives on the belief in and need for a constant upgrading of personal demands. We take this increase in our standard of living for granted. We spend our money on that assumption.

It may seem strange, then, to say that we should take a hard look at what we buy or use — and cut down expenses. Yet that is exactly what we should be doing if we want to increase the value of our money.

A few examples. Do you need that magazine subscription? Do you need the services of a gardener? Is it really necessary to have a new car? Why not purchase a good used one? New-car payments, plus the required total insurance coverage, have been the ruination of many personal budgets.

One important reason our money doesn't buy what it should is that we are using far more services than ever before. Most services depend heavily on labor costs. If we carefully budget our money, we can identify those services that lead to excess expenses. Then we can take appropriate action to change our spending habits.

One example of an area where you may be able to cut costs is by eating out less often. You might be astonished at what some people spend over a year's time eating in restaurants. Figure out the cost of a single meal at a restaurant. Then estimate how many times you do this weekly, and multiply the amount spent by 52. You will find the yearly sum spent on eating out can be astonishingly high.

5) Invest for the Future

In terms of financial goals, we must first plan for today. But we must also carefully consider the future. If we include a regular savings plan in our budget, we can build up a sizable nest egg over the years.

It's important to think through your goals in life as early as possible. However, it's never too late to do so. Consider your long-term financial goals. Make these a part of your spending and saving plan. What about a possible home purchase, the cost of educating children, and money for retirement?

Perhaps our income is not that large. Can we save at least a small portion each year? If we do this over a 30-year period, placing the money in a wise investment, we'd be surprised at how much we would have for the later years of our lives. From this nest egg, we could draw an income, upon retirement, from the interest we receive on our investment.