A few years ago I was talking to my friend Matt Carman. Matt is a financial brain and has educated me and given me great tips since I have known him. As I was talking to him, a guy that can be best described as a cro-magnon commented on how dumb budgets were. This Masters degree-toting, knuckle-dragger went on to say, “Don’t spend more than you make.” His advice is actually the foundation of this posting. I figured if he could grasp the concept, any of us can.

These are chaotic times of banks closing the doors and the government being looked upon to save the economy because we have fostered a mindset of buying things we cannot afford. Our economy is failing because we are relying on credit cards to buy things older generations would have saved for OR not even bought at all. Then there are banks and companies handing out credit like candy bars on Halloween. I was buying a soda at a department store one day and was asked if I wanted to save 10% by getting a store card…on a soda?

To stop our personal financial turmoil, we need to break the cycle of spending first. I did a small-scale experiment to accomplish this by tracking everything I spent. I saved every single receipt for an entire month. At the end of the month I separated the receipts into wants and needs. A need is something I can’t function without, i.e. food, soap, etc. The wants were luxury items like music downloads, clothing, and anything of the sort.

I also included all of my bills into the needs column. The total of the needs was my baseline. I then took on the cro-magnon’s advice and compared the amount coming in to the amount of needs being paid. Everything leftover went into the want pile. Once I got the money separated, I racked and stacked my wants. What did I want most? Do I have enough to buy it? If I did, I bought it. If not, I saved up to buy it.

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