I’ve seen a lot of people get ambitious about building financial freedom and set up a complicated plan that they only stick with until their initial enthusiasm runs out. This is true when it comes to over complicating your budget, your investments and your strategies for earning additional income.
The more complicated you make things, the harder it will be for you stick with it when your life starts to get complicated or when you are having an especially hard time staying focused and excited about your plan.
So here is a simple plan based on the principle of PowerSpending which will help you to achieve great control over your financial life and set you on the road to financial freedom.
The Four Bucket System for PowerSpending
When instructing people to practice the principles of PowerSpending, I have found the four bucket system is a great way to get people spending for value and based on their personal priorities. This system has you split your spending into four categories, which are listed here from those which should be taken care of first to those which should be taken care of last:
Using this simple system, the first ten percent of your income is spent on investments. This means before paying your expenses or anything else. Most people have more money than they realize, it’s just that they’re not prioritizing their spending, and that’s why you have to force yourself by putting investing first. Next, you have giving, then reserving money for the sake of making future cash purchases…the objective being to put ten percent into both of these.
Finally, you spend the remaining seventy percent on your expenses, once you’ve taken care of investing, reserving and giving. For most, putting giving first seems counter intuitive and they say that they’ll start giving when they start earning a lot of money. However, this is seldom the case, and the fact remains that if you start giving before you are “ready,” it has a mysteriously positive impact on your financial success. So get started with the four bucket system today and you’ll be well on your way to becoming a PowerSpender and achieving financial freedom.
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