Buy Your Freedom: Spend Less

Is money keeping you from quitting your day job to pursue your dream full time? If so, then welcome to the Buy Your Freedom mini-series.

Did you know that there are three simple actions you can take right now that will allow you to save the money you need to pursue your dreams? It’s true! And we’ll be discussing all three of them over the next couple days. Here’s the first:

Action#1: Spend Less

Most of of us have a tendency to spend a high percentage of our incomes on things we don’t really need. It may not seem like a big deal at the time – $4 for a latte here, $20 for a round of drinks there – but those little impulse purchases add up quickly and ultimately cost you the freedom to follow your dreams. Now, this doesn’t mean that you should never spring for a premium coffee drink again or that you need to become a hermit, but it does mean that you should take a careful look at your spending habits to identify the “drains” in your life.

To make your finances work for you rather than against you, write down everything you spend for an entire month. Everything. Gas for your car, electricity for your home, movie tickets, gym membership, manicures, haircuts, grocery shopping, even a pack of gum. When I did this, I was shocked at how much money I was spending on my energy bills and utilities. Some of them had little I could do to reduce it, like my water bill, but my power bill needed to be brought under control. A friend of mine has been using a smart home energy monitoring system to help them reduce their electricity costs, and it’s something I’m considering moving forward. In the meantime, I’m being careful about not leaving things on standby or running unnecessary electronics to help reduce the costs. Ultimately, by monitoring your energy consumption, you might discover that it is time to switch energy provider. In this case, it is in your best interest to compare a number of different energy suppliers such as Green Mountain Energy to determine whether changing energy providers could be the solution you need to get your savings off to a better start.

There was another expense, though, and another point of shock: The amount of money I was spending every weekend on dinners and bar tabs. Shocked, I was, absolutely shocked. But my solution wasn’t to eliminate dining out completely, instead, I reduced the frequency. This allows me to win on many fronts: 1) I save lots of money, 2) I cook more, which helps me work towards one of my personal goals of achieving culinary awesomeness, 3) I keep my weight in check (because let’s face it, there are really very few truly healthy options and even if there are, chances are I’m not eating them), and 4) it helps me appreciate the dining out experience more by not taking it for granted. Plus, I get to be constantly on the lookout for great restaurants that I have to visit at some point. For example, a friend of mine recently told me about the site for the Francisca Restaurant, which is http://www.franciscarestaurant.com, so I’ll be sure to consider that next time I decide to dine out.

As you analyze your spending habits, here are some of the biggest money drains to keep an eye out for:

• Drain #1: Buying lunch everyday (try packing your lunch at least 4 out of 5 days a week – you’ll save money, eat healthier and be psyched about the days you do get to go out)
• Drain #2: Dinners out (try limiting these to once a week, or less, and eat in the rest of the week – you’ll realize the same benefits as mentioned above)
• Drain #3: Booze (drink at home in front of a fire or on your patio – you’ll spend gobs less, you’ll be able to hear your companion over the music, you won’t have to worry about running into anyone you don’t want to see, and you won’t have to worry about driving under the influence)
• Drain #4: Unused/under-used gym memberships (if you’re not putting in the effort to make it to the gym on a regular basis, cancel your membership and head outdoors when the mood finally does strike you)
• Drain #5: Television (I know, I know, this one’s a toughie, but your TV with HD cable, DVR, and premium channels can cost you an arm and a leg, particularly if you’re using an expensive internet service provider. My friends recommend using EATEL for cheap packages so you can click here to learn about premium channels if you want to pay less for your TV.

Need help determining if one of your expenses should stay or go? Ask yourself this question: What’s going to make me happier, having _____ or having the freedom to get up in the morning and spend the whole day doing somehting I love?

What are your biggest money drains?

Check back tomorrow for Action#2 in the Buy Your Freedom mini-series.