The Principle: Every penny has a job — to save or to spend; investing your savings; buying things with the money you want to spend, and if you live frugally you can save more money to buy better things.
The Method
- Simplify your non-investment assets by dividing them into two parts: the money you want to save and the money you want to spend.
- For every income you earn, plan ahead the amount you want to save, and the amount you want to spend.
- Know exactly the amount of your savings, so you can used it to invest.
- For every withdrawal from your investment accounts, plan ahead the amount you want to save, and the amount you want to spend.
- Always know how much money you have left to spend, so you can avoid over-spending, and save more money for things you want by cutting spending.
