One of the biggest elements that prevents people from living a free life or a life of unlimited choices usually depends upon money. I think that one of the most essential skills for Americans to learn is the crucial skill of  learning how to spend one’s money.

The biggest problem that many people face is excessive debt, or what I call debt slavery. The sorry state of having money hanging over your head, usually isn’t something that people like to brag about at the bar. Whether you spent too much money on an education, your car or home, it has been a common characteristic of Americans over the last 20-30 years to spend beyond reach. We live in a society that praises heavy consumption, yet little people produce enough goods or value to compensate for the amount of money we all spend on purchasing.

The essential knowledge of financial literacy is the same skill that we should have been taught as young children. Saving money is the key to growth as it leads to the ability to finance capital investments.

After all, if we never had people with savings and capital for investing, we wouldn’t be able to regenerate  job creation or increase the output of goods and services for society.

A society that lacks any savings cannot grow, and an individual who lacks savings cannot build and create until proper financial management is resolved.

People need to increase savings and produce value. On the other hand we all need to decrease unnecessary spending and debt. Overall as a society the western world ruled by global banks has reached a point of high consumption and little production.

As Peter Schiff states in his book The Real Crash, “We have been trading production for consumption.” (Schiff, 19).

One way to identify what may be causing problems within one’s own life or your families life is to track where your money is being spent.

Here I have created a list of things that people generally spend their money on. There is a good chance that I may have left some items off of the list, that may be playing a role in your own personal life. Feel free to make your own additions, if you feel any additional items may be a part of your expenses.

What Do People Spend Their Money On?

• Food
• Clothes
• Shelter/Housing
• Health and Medicine
• Entertainment/Leisure
• Education
• Exercise Memberships
• Supplements
• Alcohol & Drugs
• Travel Expenses
• Childcare
• Pets & Accessories
• Material Goods & Toys
• Manual Services
• Care-giving
• Therapy
• Dental Care
• Electricity
• Gas
• Internet

Chances are that if you live in the western world you spend money on multiple listings that I mentioned above. It is not necessarily a bad thing to spend money on items that I mentioned above. A lot of things are essential for human survival and for the progress of everyday life.

My ultimate goal for myself and other people is to find a way to build discernment and discipline of what I should say no to. The best way to save money or build a larger income is to learn how to say no and cut off areas of unnecessary spending.

If you want a good practical guide on how to Say No to certain experiences and everyday matters that may negatively be effecting you, check out James Altucher’s book.

One way that I like to look at expenses is by asking which accessories can easily be downsized, or what stuff I can sell off  that I don’t need. It really isn’t necessary to continue paying for a 2000 square foot house for instance when a married couple no longer has children living at home. It also isn’t necessary to pay a lease of $700 a month on a nice luxurious sedan like an Audi A6, if you were only making $40,000 a year.

Another great way to fatten up the wallet is to cut down transportation costs and drive less or take advantage of public transportation. Biking to school or work, or even using a car with good gas mileage is always a win-win. According to Entrepreneur Magazine, “Transportation is the second largest expense for the average American family.”

Nowadays it’s all about making smart decisions and using your own logic and common knowledge to figure out what is worth the cost and what exists within your own personal market of spending.  If you are spending just for the sake of pleasure and self-indulgence when you have no real money to back that spending, it results in a foolish wreckage of debt or even worse personal bankruptcy.

I’m not saying that people should sell everything that they own, or never buy anything at all. My main focus is to re-direct people so that they learn how to live within their own means and lead a happy life by not entangling themselves with financial chaos.

If you are smart enough to master your area of interest or create something of value for other people’s lives that other people will pay for, I’m sure that you can laugh all the way to the bank.

The problem for most people is deciphering what is worth one’s time and what isn’t worthwhile. Once you decide what is worth your time, you can begin to develop methods of making money and saving money in your free-time. If you are the type of person who has ideas but no money, look for possible opportunities of partnership or possible investment companies.

Don’t be the type of person who waits half their life-time before they actually take any form of action to obtain personal enrichment.

The paper chase is something that everyone has to deal with, but not everyone has to chase paper. Money management requires clear vision and a well rounded understanding of cash flow.

The beautiful thing about money is the freedom that it can enable for you to do the things that you enjoy. In order to seize freedom you have to execute opportunity. The best way to achieve freedom is to build a platform from which you launch your personal arsenal of strategies.

It doesn’t always make much sense to focus your energy on spending less money, when you can redirect your focus on making more money. Yes, the small changes to cut expenses will pay dividends down the road, but your potential earning power is the one factor that theoretically holds an unlimited value. My best advice to obtain a full plate is to keep your projects and if haven’t already, start to emulate the behaviors of the income generating genius’ that walk their talk.

Deal with money as a means to an end, and be a nighthawk who never sleeps on the adoption of monetary details!