Although it might seem obvious that we should spend less and save more, but as a society, we have been taught and are actually encouraged to spend every penny we earn. We’re constantly tempted with offers to buy now and pay later. These messages lead many to live beyond their means. As a result, they live paycheck-to-paycheck or client-to-client! This habit ends up destroying any chance we have for financial freedom and financial peace.

The solution is to create a clear picture of how much money is coming in for the full year and how much is going out by following these three simple steps:

  1. Let’s start with where your money is going. Begin by listing every one of your expenses for a full year. Remember, some of your expenses like mortgage, car payments, and utilities are monthly while others like auto insurance or the water bill might be quarterly. Don’t forget expenses such as property taxes and insurance which might be semi-annually or annually. Take this total for the full year and divide it by 12. This will show you how much you spend every month. Be sure to include your pocket money and go through your credit card statements to make sure you get everything. You want to ensure you have a complete and accurate amount.
  2. The next step is to calculate the amount of money you make every month post-taxesand subtract your expenses from step #1.

Is there money left over? If there is extra, then that’s fabulous, because next week, I will show you what to do with it.

However, if the amount is negative, then what do you think is happening? You are probably spending more than you make and going into debt. This should be a wake-up call and the message is to “stop spending more than you make.”

  1. You’re now ready to go back through your list of expensesand put a plus mark by everything that is absolutely crucial and everything that raises your self-worth.

Next, you want to find the areas you might be able to eliminate in order to increase your bottom line. Yes, just a like a business, you want to increase your bottom line.

This week I want you to just work on this one area to get really clear about where you stand financially. You need to know how much money is coming in and how much is going out. The secret will be to spend less than you make while living a rich and rewarding life.

Over the next few weeks, I will be sharing more and more ways to do exactly this. Your ultimate goal is to create a healthy bottom line – meaning you have money left over at the end of the month. Having money left over at the end of the month means you are spending less than you make which is the first step to creating wealth.

Next week, we will talk about “How to pay yourself first.” In the meantime, if you have any questions for me or any comments, please email me at!

P.S. If you haven’t checked out our FREE course yet featuring my signature six-step system called, Unlock Your Financial Power: They Key To Health, Wealth & Happiness, be sure to do that now by clicking here for immediate access!


Katana Abbott, CFP® practitioner, is a Life and Legacy Coach™, host of the Smart Women Talk Radio™, founder of the Smart Women Companies with over 1 million subscribers globally, inspirational speaker and author of several books.

She began her financial planning career in 1987 and became a Certified Financial Planner™ practitioner. In 2003, Katana created Smart Women’s Coaching® to offer financial coaching and educational workshops for women in transition who are dealing with caregiving, death of a loved one, divorce, retirement or looking to create or grow a business.  She founded Smart Women’s Empowerment in 2008 to bring free financial empowerment resources and programs to women around the world through her team of Contributing Experts.