The Dollar and the Dream

December 3, 2007

Who does not dream of hitting the lottery? As jackpots increase so does the line at the lottery counter, literally hundreds of people standing in line with their dollar and dreams of an easier financial life.

The fact of the matter is the actual odds of hitting the lottery are very low. However, the odds of you bettering your financial situation by utilizing a few easy steps are extremely high.

Let us assume that you spend on average a total of $30.00 per month on lottery tickets, over the course of one year that will amount to $360.00. When looking at it from this perspective, I bet you can think of at least three items you could use that money towards, for example, maybe a credit card payment for a month, holiday expense, etc.

Think for a moment how you can put that $360.00 to work for you. Yes, unbelievably you can make your money work for you and not the other way around. Begin by becoming aware of all the many options available for your money. Think of it as finding employment for your money. Learn all you can about investing, the library, the internet and your local community college are great places to start.

For illustration purposes, let us assume you have found a great way to invest the $360 per year that was being spent on lottery tickets. Further, assume an interest rate of 5%, which will be compounded annually. At the end of 20 years, your investment will have grown to a total of $13,454.12. Obviously, the figures we have used here are simply just a means to illustrate the concept presented here.

Just imagine what that windfall of $13,454.12 could mean for you and your family. The possibilities are virtually endless, a down payment on a house, a new car, a long overdue vacation are just a few examples of the many ways in which you could enjoy the new found cash flowing into your life.

In fact, you do not have to wait 20 years to begin developing ways in which you can increase your financial prospects. You can begin to develop a spending plan. By having a clear plan that allows you to see how you are utilizing your money you will be presented with the opportunity to devise ways to increase the actual dollar amount that could be used for spending.

Implement a tracking system for the period of one month in which you document all expenditures you make. This will include everything you spend your money on. By tracking your spending, you are improving your money awareness, which will go a long way in helping to improve your financial outlook.

Once you have tracked your spending, take a look at the actual dollar amount of the income, you have available during the course of a month. It should be understood that your income should be larger than your expenses.

Now that you have a much clearer view of your financial situation, begin to separate your expenses into two categories. One will be for your fixed expenses, which will include rent or mortgage, car payment, etc. Simply put the fixed expense section of your spending plan will include all expenses that remain constant during the course of a month. The second category will be for the flexible expenses, which are those that tend to fluctuate month to month. This includes, entertainment, dining out, etc.

After reviewing both your fixed expenses and flexible expenses you should begin to search for ways to make cut backs. These cut backs should amount to an estimated 15 to 20% reduction in your expense categories.

The next step to a successful spending plan is to include a section for savings. The actual dollar amount you decide to set aside each month or pay period is not what is important. The important part is the physical action of saving. By making saving a regular part of your financial life, you will have developed a saving habit, which will stay with you for years to come.

Budgeting for a household, does not have to be regarded as a negative process. In fact, if you undertake the process with a negative view, chances are the plan will not work. However, by adopting a more positive approach to managing your money, you will begin to see the prospect for prosperity in places you never would have imagined before.

In order to get that winning lottery feeling, you need not wait in long lines at the local convenience store. Simply become committed to a more positive money awareness attitude. With a more positive attitude towards your money, it will become second nature to build a budget and stick to it.

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