An Engineering Approach to Money

It’s very important to have something to strive for, saving money is hard work. It’s just so much easier to spend that $20 than it is to put it away. Delayed gratification is not exactly a strong suit of most people. So rather than going out and just putting that thing you want on your credit card, use it to motivate yourself to save.

Examples:

1. When we pay off all our credit card debt, my wife and I will have a weekend away without the kids.
2. When our cash cushion is 6 months spending we’ll plan a family trip to Disneyland.
3. We’re saving $40,000 for a down payment on our first house.
4. When our net worth is 1,000,000 we’re going on a 2 week Cruise.

Whatever works for you as a goal will give you something to shoot for other than the abstraction of the dollars in your bank account. Don’t bust the bank, putting a vacation on your credit card to celebrate paying off all your credit card debt is not a good plan. But try to make it something big enough to motivate you through the tough times it will take to reach these goals, but not enough so that the cost of the motivation sets you back on your real goal which is to become financially independant.

This entry was posted on Thursday, September 21st, 2006 at 12:39 pm and is filed under Theory. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.