I want to talk today about the most common cause of debt.
Most people don’t know how much they earn or how much they spend.
Money needs clarity.
In order to pay off debt you have to spend less than you earn.
However if you are not crystal clear about how much you earn or how much you are spending then it is human nature to spend it ALL until there is none left. And then a bit more.
We earned good money for years in our business but we were not crystal clear about exactly how much. As a result we found the money went out as fast, or faster, than it came in.
We felt powerless and confused.
But not any more. Now we know the importance of money clarity. With clarity comes confidence.
Are you aware of exactly how much you earn in a year?
The money you earn includes your income from your job or business, bonuses or overtime, commissions, investment income from properties, shares or interest, money from hobbies, gifts, government benefits, spousal maintenance, royalties or freelance work.
When you know what you earn you can create a budget that ensures you spend less than than that so you have some money left over to pay off debt or save for a long term goal.
It doesn’t matter how much you earn, if you are not clear about it you cannot make a good financial plan to pay off debt or increase your wealth.
Most people think earning more money would solve all their problems. Then they could pay off debt and finally be free, but it is just not so.
We were living proof of that. Our income increased but so did our spending.
If you are not clear about how much you earn or spend when you are on a lower income, you won’t be clear when you earn a bigger income. In fact studies show that, generally speaking, the more you earn the more debt you have.
This was certainly true for us.
The first step in becoming debt free and financially savvy is to figure out exactly how much you are earning now. That doesn’t mean it can’t increase. Of course it can. But if you have money clarity now you will get much more out of your money when you earn more.
You will know how much you need for your basic living costs and you’ll know how much is left over. You’ll be able to use that extra money in a much more constructive and conscious way to pay off debt or improve your life in whatever way is right for you.
Today, I challenge you to sit down and work out your total combined household income for the year (as best you can). Look at your payslips, dividend returns, bank statements and write it all down.
You will then have much more power to choose how you spend it.
Love and hugs