The economic downturn reduces a lot of people’s incomes. Lower incomones force us to use money carefully and to set priorities of our spending. On the other side the cost reductions should not stop us from achieving our goals. The following process shall help you to free up money from activities with lower priority so that you can keep those activities which advance the achievement of your goals.

Take your bank statements for the last three months and list the payments for activities in three columns.

The first column is related to cost of living such as rent, insurances, etc. Check how much of your income they represent and think of ways to reduce some of these items (change of provider, renegotiation, etc.). The second column is used for spending that is related to goals of lower priority. The third column is for the payments for activities related to your goals for life. Sum up the total of each column.

It becomes obvious that you probably have potential to shift funds to high priority activities or to reduce overall spending without touching these and cutting in the low priority payments. The current economic downturn is a good opportunity to start this exercise but I highly recommend doing it once or twice a year. In good times you might increase your savings or spend even more on the achievement of your goals for life.

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