R.E.S.P.E.C.T.

A long time ago, I wrote an extremely well-received post in which I outlined the basics of personal finance on the back of five business cards. After that, I converted the cards into a presentation that I’ve used many times when I’ve been invited to speak on personal finance topics in my area.

A few weeks ago, a person I know in the community asked me to summarize that presentation quickly. I couldn’t quite remember all of the details off of the top of my head, so I basically sketched out the ideas on seven sheets of paper.

After I finished, he smiled and said, “Respect!” I didn’t really understand what he meant, so I just thanked him. He shook his head. “No, no, respect! R-E-S-P-E-C-T! That’s what your presentation spells out!”

I looked back over the sheets of paper and, sure enough, those were the first letters of the sentences and phrases on top of each sheet.

I suppose there’s no better time than now for a little respect. Here’s a summary of those seven sheets that I showed him.

Routines Are the Key
Your daily routine should minimize the amount of money you spend. Every time you can find a way to reduce spending as part of your normal routine, you should take advantage of it. Shaving just a dime a day off of your routine adds up to $36.50 by the end of the year. Spending an extra dollar a day adds up to $365 by the end of the year.

Experiment with little changes to your day until you can find a way that maintains the life you want to lead with the minimum daily expense. You’ll never regret it.

Expand Your Goals
Figure out exactly where you want your life to be going. Think very carefully about what you want your life to look like in five years or ten years, then come up with plans to make each of those details come true.

Having a vision for the future not only provides motivation to make better decisions each day, but it also helps you to set savings goals. If you have a plan that’s going to require $20,000 in five years, it’s a lot easier to come up with that money if you start socking away $10 a day right now, which will get you almost all the way to that goal.

Spend Less Than You Earn
No matter what you earn, you need to strive to spend less than that. You should never spend more than your paycheck because, if you do, you’re either depleting your savings or relying on credit, both of which are financially disastrous over the long run. If you know big expenses are coming up, put aside some cash right now to help deal with it later.

What if you find this “impossible”? You’re either spending more than you think on luxuries – which you need to cut back on – or you are genuinely in poverty, in which case you should be looking seriously at government and community services that can aid you.

Practice Frugality
The goal of frugality is to simply maximize the usefulness of every dollar by seeking out the best “bang for the buck” with every purchase that you make. This ties in tightly with making a minimal routine, as mentioned above, but it pops up every time you spend a dollar.

There are always ways to trim back on your spending. The best ways are the ones that don’t bring about any reduction in the quality of your life. Try out lots of things and discard the tips that add misery to your life – and keep the ones that save you money without reducing your quality of life. Here’s a list of 100 ways to save money to get you started.

Earn More
There are always opportunities to earn more money, whether it’s a part-time job, a side business, or something as simple as doing simple computer tasks to earn a few bucks. At the same time, there are often many paths toward earning more money in your current employment path, whether through education or a better approach to handling your work environment.

What can you do to earn a little more income? Do you have blocks of hours each day that you could fill with some extra work? Do you spend a couple hours each evening relaxing when you could be doing some simple computer work to earn a few bucks? Maybe you have some skills that you could ply in your neighborhood, or perhaps you can improve your profile at your current job by applying some extra effort. More income always helps with your financial state.

Control Your Own Destiny
Personal finance is about personal freedom. The fewer debts you have, the easier it is to switch jobs or try new career paths or even to retire. The more money you have in the bank, the easier it is to jump into a small business or become self-employed.

Whenever you make a hard choice to improve your financial state, don’t look at it as just money. Instead, look at it for what it really is – a direct improvement in your life. Every debt that disappears is more opportunity and less stress for you. Every dollar in the bank is more flexibility and less control that your boss has over you.

Think Positively Along the Way
Sure, “think positive” might seem trite, but it makes taking on a real challenge like turning your finances around much easier.

Don’t focus on what you’re missing out on. If you ever catch yourself thinking about that, stop. Instead, think always about what you’re gaining and about the better life you’re building for yourself. Think about that five year picture and how great it will be when you reach it – and enjoy every milestone and big step along the way.

It’s all about respect.

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