Balancing Spending and Saving

[Charles W.]

In this business we all know cash is king. I have recently noticed that my goals to build wealth have been impacting my quality of life more and more. We have been putting every penny away and avoiding all the things that make living nice to build that nest egg as fast as possible. I've recently come to the realization that left to my own devices I might not ever stop and could miss the opportunity to enjoy the wealth I'm creating.

I think this is probably an issue most business people run into eventually. How much of your business earnings do you reinvest into growing your business versus using for personal enjoyment? How do all of you manage to keep the balance in your personal spending and goals for the future?

[Luis A.]

That is a darn good question and one that I have also faced.

It all comes down to what is important to you. Yes, building wealth is not easy at all if you want proof of that look at how many people are broke vs how many are wealthy :D

Any goal that matters to you and is challenging will require sacrifice. However, it is important that on the way there you reward yourself for small victories.

I set rewards for myself if I achieve the short term goals that support my long term goals. For example, we always have a celebration after we sell one of our properties. It can be something small, like a fancy dinner or if the transaction went really well then it can be a weekend getaway.

For the last year we had been saving for an extended trip and since we did well in our recent flips AND had saved the money we rewarded ourselves this summer with a trip to France. We paid cash for the whole thing and enjoyed the hell out of it. It was only a fraction of our business profits and it was the experience of a life time.

Find out what is important for you and your family and every time you make any money put part of it away with the specific intent of using it for fun, enjoyment and rewarding yourself.

Try putting 10-15% of all the money you come across into a "fun" account and then use that account for whatever you feel like...no guilt :D

One thing I caution you is that in our society a lot of people equate things with quality of life. As if the more "stuff" you have the better off you are and the better your life is. But if you look carefully at your friends with the most stuff sometimes those are the ones with the most debt and with no idea whatsoever of what wealth is and when or if they will ever be financially independent. :roll: