Step 1: Spend Less Than You Make

What good is a full tank if there's a hole in it? That's the question at the heart of Step 1 on your Fuel Gauge: Spend less than you make.

Although it sounds simple in theory, I've sat across from enough people to know that this first step is where most of us are quietly bleeding in our personal finances. 

The first winter I spent with Lauren's family in Michigan, her dad offered to let me chop down a tree with an ax. Now, I had never held an ax in my life. But when he asked if I'd done it before, I did something I'm not proud of. I lied. I grabbed that ax, found my footing on the slope, and started swinging like I knew exactly what I was doing.

As I was about to finish the tree off, I swung hard, and instead of hitting the tree, the ax went straight into my boot. Adrenaline kicked in, and I told myself it was probably just a scratch. So I kept going. The next thing I remember, I was in the bathroom, boot in the tub, realizing I had hit a vein and was bleeding more than I wanted to admit.

When I finally took a good look at the actual cut, I realized it was small, about a quarter inch. It wasn't the catastrophe it felt like. A little super glue, a big bandage, and I was off to the races again. 

Before you assume everything is out of control and you need to completely overhaul your finances, take a breath. More than likely, there are only one or two areas of your budget that are out of control. The rest of it probably isn't that bad. All is not lost. But you do need to stop the bleeding.

The purpose of Step 1 isn't to obliterate every spending category in your household. It isn't rice and beans for the next four years. The purpose is simply this: fix the problem areas that are causing you to spend more than you make.

I want to give you three practical tools to do exactly that.

The first is the 24-hour pause. Before you click that one-click button on Amazon or walk into a store mid-retail-therapy session, just wait one day. Online sellers spend enormous resources on technology designed specifically to get you to buy before you think. The countdown timer, the next-day delivery, it's all engineered to remove friction so your money slides out before you've had a second thought. The 24-hour pause adds that friction back. If you still want it tomorrow and have the budget, go get it. But give yourself time to think.

The second tool is the buddy system. If willpower alone isn't enough, and for a lot of us, it isn't, get someone else involved. If you're married, that person is your buddy, built in as a good filter for you.  If you're single, find a trusted friend, roommate, or sibling to serve as a sounding board. The best buddy is someone who is the opposite of you when it comes to spending. Before you make a purchase that would blow your budget, give them a call. If they give you a thumbs up, and you're within budget, go for it. Thumbs down? Listen to them and walk away.

The third tool is cash. When you hand someone a $20 bill, you feel it leaving. When you tap your phone or click to buy, you feel nothing,  and credit card companies are counting on exactly that. For the one or two categories that are bleeding the most, go to cash only. When the cash runs out, you go home. It works faster than you'd think.

Find your one or two problem areas. Pick a tool. Stop the bleeding.

Your Fuel Gauge is waiting to move. 

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Zach Santmier is the owner of Trumble Agency, Inc. and the author of the personal financial course, Increase. He focuses on helping families escape paycheck to paycheck living so they can freely pursue their ideal future.