Thermometer VS Thermostat - Sis
Which are you when it comes to your finances?
A thermometer household is one that simply reads its surroundings. This family spends money on things they think are essential mindlessly. They keep up with the neighbors and shop at the big box stores. They are influenced by media ads and others influences in the environment. Most of society's households are thermometers.
A thermostat household regulates the environment. They will collect data and adjust finances accordingly. They will remove unnecessary spendings and strategize ways to save even more. These households are not only reactive, but proactive as well.
How do we all become smart thermostats?
The neat thing about thermostats is they not only read the temperature of their surroundings, they also regulate it. Below is how to program your houses smart thermostat.
1) One must identify the current temperature of their financial situation. Establish a budget. Figure out where your spending is currently. For example you can use the application Mint to help track your finances. You can also get your credit card or banking application to track sending easily.
2) Set a temperature. What are your goals? What is money doing for your family and what do you want it to do in the future? What is important to you? Do you want to save for a child's college or take a month long trip around the world? Short term, maybe you want your daughter in dance, which is so not cheap.
3) Determine if its too hot or too cold. You may need to adjust your daily spending on lunch or coffee, turn down the temperature of your finances. Maybe it’s too cold and you could use tax optimization tools to fill retirement accounts.
4) Once you reach a happy temperature for your family it is easier to maintain the environment. Some days your going to have to heat things up a little and others you may need to cool down. Stick to your set temperature and make small adjustments along the way.
It is important that you are reactive to your temperature. Everyone’s house is set at different temperatures. You have to find what works best for you and your family. Each family also has different seasons with different needs as well. It is important to remain reactive to your readings.