Before Trying To Earn More Money, Take Back Control of Your Money With This 5-Step Plan

1. Take stock of your finances to see how you use your money

You can’t manage your finances properly if you can’t measure how well you spend your money. This is something fundamental to understand. The solution here is to take an accurate inventory of your finances over the last three months.

From your bank statements of the last three months, you will be able to categorize all your expenses and receipts of money. You will be able to see exactly what your sources of income are and where your money goes.

This will allow you to define an accurate budget. Consider including expenses that are not monthly or quarterly, and therefore might have escaped your listing. I’m thinking here of vacation expenses that are incurred once a year, for example. You can divide their amount by twelve to include them in your monthly budget.

2. See what unnecessary expenses you can eliminate

From your detailed and accurate budget, you will be able to see which expenses cannot be cut: rent, electricity or gas bill, and food.

You will also see expenses that you can cut. Do you buy a coffee every morning at Starbucks? Do you eat lunch at a restaurant every day? You can probably save money by better managing these expenses.

Give yourself one Starbucks coffee a week and one restaurant lunch a week. The rest of the time, bring your coffee in a thermos or bring your lunch. You’ll find that this will save you a pretty penny for a year.

Finally, get into the habit of giving yourself time to think before you make a purchase. This will help you to ask yourself if you have the latest iPhone or if yours, which is only two years old, can still serve you for several years. It’s a trick that works and that allows me to save a lot of money every year.

3. Define your priorities

Buying a new iPhone every year is an unnecessary expense in my eyes, but maybe it’s not for you. After all, we’re all different and we all have our priorities. That’s why defining your priority is an important step.

If your priority is to always have the latest iPhone, then you should follow what you want to do. Your priority may be to have a bigger budget for your vacation because you like to travel.

Others prefer to use their money to pay for training to improve their skills. This is called investing in yourself to succeed in your career afterward. Finally, some prefer to invest in the financial or real estate markets to make the fruits of their labor grow.

All of this is the result of choices you will have to make.

4. Make the most important choice in your life: decide to pay yourself first

Once you have defined your priorities, you need to remember what your top priority should be when bringing in income. That priority should be to pay yourself first no matter what.

Far too many people make the mistake of paying others first and then seeing what they have left at the end of the day. This does not allow you to use your money fully in the service of your life.

So you must pay yourself first. Then you will pay others, and live with the rest. Many people find this approach radical, but it’s what everyone who has regained control of their money uses. After a few months of adjustment, you will see that you will not regret having taken this good habit.

5. Set a budget for pleasures and stick to it

With an accurate budget that includes you as the primary expense, you will have a better idea of what is left for your pleasures. You will be able to define a monthly budget for your pleasures, whether it is going out with friends or the monthly allowance for your annual vacation budget.

Defining this budget is only the first step. The easy part if I may say so. The hard part will come when you have to stick to this budget for your pleasures no matter what.