You work hard for your money, so why freely give it away? “It’s only a dollar.” “It’s just a few bucks.” I’ve heard phrases like those over and over. In fact, once upon a time, I’ve caught myself saying similar phrases. Many of us have a tendency to be far too loose with our money. Why is it that we put so much energy into securing work to gain money and then let that hard-earned money go where it wants without a fight?

The fact is that you most likely work hard for your money and every dollar counts. Don’t give away anything.

If you want to build wealth, you need to plug up your financial leaks. Even a small leak can equate to a flood later on.

I love finding waste in a budget and cutting it. I’ll cut an expense that’s not producing enough value in a New York minute.

Let me give you an example of what I did to start this month.

No Expense Too Small

A bill for a popular streaming content service was coming due again and I was about to be out another $7. Yes, I could afford the $7, but was I getting my money’s worth (perceived value)? W

Since the expense in question was $7 it would of been foolish of me to spend hours of my time coming up with a decision. Instead, I asked myself a couple quick, simple questions:

  1. Is using this service providing a possible gain? No. I’m using this service just for entertainment and not utilizing the consumption of this particular entertainment for anything but enjoyment.
  2. How many hours of entertainment did I or other members of my household consume from this source over the last 30 days? 4 hours ($1.75 per hour).
  3. Could that content have been watched elsewhere for a lower cost? Possibly. An example would be if I had watched three movies that could of been rented elsewhere for less than $7.
  4. Is my usage over the next 30 days likely to be the same as the previous 30 days? Yes
  5. Cost for change? None. An example of something with cost would be canceling a mobile phone contract where you’d pay a fee to break your contact. In that case, the cost would need to be factored into your decision.

I asked myself these questions in minutes and quickly had my decision, which was to cancel the service. I may come back to the service later, but in the meantime I’m not spending $7 for what I consider to be less than $7 in value. Additionally, while the service provider is charging me $7, my true cost is higher than $7 as I must account for taxes, which means I need to make more than $7 each month to pay for this service.

I’m sure some readers might wonder why bother with something like this, but if you’re money management skills are poor at this level, it only gets worse as you go up.

A Nickel for Your Dime

How much do you pay attention to your spending each day? It’s really easy to go through the motions with money, especially when you get busy. But, if you were to record your life then sit back and watch the video, you’d probably see many transactions where you were a bit frivolous with your money.

It seems like no matter what we do day-to-day someone is always asking us to spend a little more and that “little extra” adds up. From ordering something at a fast food place to buying a major appliance, it seems like almost every transaction you engage in today has the potential to take a “little extra” out of your pocket.

Recently, I went into a popular electronics store to pick up something. I knew what I was going to buy and all I wanted to do is run into the store and pay for it and go home.

However, upon informing the salesperson what I wanted, I was then asked many questions that were all tailored to cost me money. Perhaps I wanted this warranty or that special “deal” or some other add-on product or service.

If you’re not careful, you could spend a small fortune over your years just on all the nickel and dime stuff thrown your way each day.

You must be a good defensive player to keep your money.

Money Action Points

  1. Learn to say NO first as an automatic response. Everyone and everything that wants your hard-earned money must provide the proper access code (“value justification”).
  2. Make sure your expenses are worthwhile. At least every now and then take a little time and review your expenses in detail to make sure you’re getting your money’s worth—just like I did with the content streaming service. Remember, every dollar counts. And just because something works in your budget doesn’t mean it’s worthwhile.
  3. If you feel rushed to make a decision, say no. My store experience is a good example here. Rather than feeling overwhelmed by the shotgun sales approach of the salesperson, just either say no to everything or get all the possible options, tell the salesperson to wait and go do your own analysis in comfort. Never give in to pressure. It’s your money. If someone can’t wait for an answer, they don’t deserve your money, so the answer is no.

The Bottom Line

It’s your money. Make every dollar count and make everyone fight for those dollars. At least every now and then look over your expenses to make sure you’re getting the value you think you should. Cut out expenses that don’t stack up and eliminate waste.

 

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