The Indicator of “˜5′

There is a fantastic concept not oft employed ““ but quite effective when used. Not knowing if it really has a name, let's call it The Indicator of “˜5′. It is simple, yet powerful. Here's how it works, and more importantly, how to make it work for you…

Take any 5-year period in the past: examine your income, your outgo, any changes to your financial situation; poll friends and family for the same information. Most often, you will find this common truth: Expenses have risen ““ income has not kept pace. Now, before you tune out, remember ““ it's simple, not profound. And when applied to life, powerful.

Instead of allowing the truth of rising prices and non-rising wages discourage you ““ use it to fuel you. The Indicator of “˜5′ really isn't as depressing as it may sound at first. Smart money-handlers know that to keep income sufficient, you actually must control outgo. Like most others, you probably have little control over your income. But you do have some control over expenses. And you have complete control over the biggest variable ““ yourself.

Use the Indicator of “˜5′ to help make decisions on what is really a need, and to keep impulse in check. Fully evaluate the extra income you'll need ““ and for how long ““ when that shiny, new toy beckons. Resist the natural urge to assume your income or outgo will “˜be better in the future'. This reality check can save years of struggling with payments you can't really afford; and years of living with regret and a heavy heart.

Use the Indicator of “˜5′ to help you plan for the future. You know things probably won't change much in the next 5 years ““ and, sorry, it's unlikely the sweepstakes people are headed for your door ““ so plan accordingly. Back-date future needs to present day ““ and determine how much per month you'll need to set aside.