Income – expenses = surplus/ (shortfall)
Simple enough, right? If you spend less than you earn, you will have cash left over. If you spend more than you earn, you will have a shortfall.
You may have noticed that I did NOT say, “if you earn more than you spend.” Spending less and earning more are NOT the same thing. This is an important distinction, critical to your new attitude.
Now that you have taken the decision to improve your financial situation, this is the next major shift in the way you look at money. Take a moment to digest this point. Don’t carry on reading until you’ve grasped the subtle but vital distinction between those two statements.
DO NOT focus on trying to earn more than you spend. Get that idea out of your head. Your goal should be to spend less than you earn.
We’ll revisit this in Chapter 9.
Happy with this first equation? Makes sense, right?
Okay, now let’s turn that concept upside down and adjust your attitude again.
Pay yourself first.
Save BEFORE you pay the bills.
Save as much as you can. Every month. Set up a debit order that runs just after you receive your salary, moving money into your savings account. You won’t notice this money was there, and you won’t miss it.
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