(Editor’s note: GregoryBresiger.com, in a serialization of a book, will present a series of articles over the next months. The book is about how effectively to save, invest and use credit. The series will detail the money problems of millions of average people but it will also explain how one can overcome them and achieve financial independence).

“I don‘t know how much I‘m paying for various things. I don‘t know how much interest I‘m paying on my credit cards. I don‘t want to know what I‘m paying for all these things. And Judas Priest! How did I run up this bill and in this ghastly amount?”

Have you ever said any of those things above?

You can admit it. Most of us have said it at some time in a busy life in which we spent money on so many things, yet later we realized some purchases were useless. I said the above many times in my 20s and 30s. So this chapter is for everyone. It can help you live well below your means. That is one of the goals of a well-planned budget. It is a budget that also contains money each month for savings and investment. The latter doesn’t have to be a lot, but it must be done every pay period over years. It should be a regular budget item; the same as rent and food.

Here, in a dull as dishwater subject called budgeting, is one of the secrets of how some people start with little or nothing, yet end up financially independent, knowing that they can meet every contingency. That’s because they have, through patience and consistent habit, developed considerable assets.

Those who budget, those who know how much and why they’re spending, have a much better chance of achieving wealth than those who don’t. That’s according two authors studied wealth creation. They say that those who build wealth all share at least one common characteristic that comes through budgeting: “They (the affluent) live well below their means”. [The Millionaire Next Store. The Surprising Secrets of America’s Wealth,” Thomas J. Stanley, William D. Danko, p3, (Longstreet Press, Marietta, Georgia, 1996)]

In short, they don’t overpay. They don’t engage in impulse buying. They don’t allow screaming tube announcers to change their lives. They don’t buy things just because others are and because they just watched an infomercial with some celebrity hawking a product, a celebrity has hasn’t a clue what is your financial condition.

Those who don’t waste money are MoneySense people. They know what they’re doing with their hard-earned bucks. This is critical in achieving financial independence.


Budgeting, how one spends, will help ensure that your means of generating wealth won’t get eaten up in overspending. Income is unlikely to be wasted if you live with a budget. You won’t spend money the way the U.S federal government does. Our reckless government has been recording record deficits and debts that will fall on the shoulders of future taxpayers.

It’s 10 p.m. Do You Know Where Your Money Is?

How you budget or, in some cases, whether you budget or not, can be the most critical factor in whether you can achieve your financial goals. Let’s begin with the idea that, if you don’t have a budget, if you just spend wily nilly, then you are like a person going to a place for the first time without a GPS. You’re just hoping you’ll arrive at the right place at the right time. Your chances of success are bad.

To achieve most goals in life you need a plan. It can be formal. It can be informal. It can be written. It can be oral. But there is an idea, an intelligent thought or set of thoughts, in how one spends money.

For example, my wife, the ever-comely Suzanne Hall, and I went to Las Vegas a few years ago. She wanted to gamble. I didn’t. We agreed on a spending plan. We didn’t make a big deal about it. But we knew what we were going to do and did it.

At the outset, we agreed on a set amount of dollars that could be spent on various things as well as on “gaming.” The latter is the euphemism that casinos and those who push lotteries like to use to promote gambling. The latter is a more accurate term. But tube ads are today often jammed with Newspeak. The latter is the language of Big Brother in George Orwell’s masterful “1984.”

I considered this money as an expense of just as we would pay for food and lodging. We can spend right up to this amount and no more, I said as I gave her gambling dollars.

My wife had a set amount to play the slot machines. She lost it all. She enjoyed herself. She never asked for a cent more. What we agreed on is what we spent and not one cent more.

By contrast, I saw many people in the casinos who obviously weren’t following a budget. They weren’t playing with an intelligent plan except, from time to time, saying to a casino employee, “give me another stack.”

Unlike the people you see on the casino idiot box ads—where everyone seems to be winning, where everyone seems to be a jumping jack, where all the women seem to be supermodels and are jumping into the arms of delighted boyfriends—almost all those poor souls seemed unhappy or incredibly tired or both.

When you play a game involving quick computations, you’re obviously doing your opponent a great favor by playing when you’re tired and more prone to mistakes, or guzzling free booze.

Play Some More, Sir?

That’s why the house never asks someone to leave the table when he or she is on a protracted losing streak and still seems to have some money left while big winning card counters are sometimes shown the door. That’s also why the house gives you free booze, but forbids its employees from imbibing. By the way, the hotels will often give you cheap rates in Las Vegas. But that means getting to and from your rooms always leads you through casinos. They don’t allow employees to gamble. Can you guess why?

The point is, unlike many of these poor souls in the casinos, we lived with a budget. And, by the end of the vacation, we were happy to leave Las Vegas with the bulk of our lifetime savings and investments intact.

That’s more than one can say for many other poor souls vacationing in Vegas. When we received our credit card bills for our vacation, there was no problem in paying the entire balance within the grace period. That’s because they were just about the amount we expected. That meant the card company provided us with a short- term zero percent interest loan. We also earned rebate points that we later turned into cash, which slightly reduced the costs of our trip.

Motto of the story: Have a spending plan or budget for any substantial spending event or events. Don’t think of it as a big deal. It can be constructed in any manner. And, if married, it is vital that both parties agree since they are jointly responsible for the household’s income and spending. The couple must, in the process, recognize each other’s needs and wants and understand what’s possible within their resources.

Finally, patience is a vital quality in making a budget work, or almost anything else in life. One doesn’t have to have everything all at once. One doesn’t have to take four trips in a year; certainly not to Vegas unless one wants to engage in financial self-destruction. One or two trips can be just fine this year and then you’ll have two more to look forward to next year.

One also doesn’t have to eat out three times a week. Eating out once or twice a week can be just as satisfying, a long-time financial adviser recently told me.

“I had a client who was eating out several times a week. It was just too much. I persuaded him to cut it back to once a week,” according to Lewis J.Altfest, CFP, a certified financial planner in New York City.

You Need a Budget

If you think you earn too much to have a budget or you just don’t need any spending strategy, then you are making a mistake that many big earners and even big shot developers have made. [See the book “Trump: Surviving at the Top.” Trump admits that, at one time when his real estate empire was in trouble, he had less of a net worth than a homeless man who had zero.

Trump, through lavish over borrowing, admitted that at one time, in the midst of a real estate recession, his net worth was tens of millions of dollars in the red. Why didn’t his bankers push him into bankruptcy? It might have taken years to unravel what assets belonged to Trump and which to the bankers. They extended more credit and bet on El Donaldo eventually turning around his fortunes, which he did.].

Even people with big incomes often overspend and get into trouble. That’s what the financial adviser once told me. And I came across the truth of his comment in a recent story. Altfest generally just advises very successful professionals. These are people who tend to have annual incomes of between $600,000 and $3 million a year. The first time I interviewed Altfest years ago, on a story for “Financial Planning Magazine,” he told me that he spent a large part of his time providing “credit counselling” for these big earners.

I was surprised.

“You’re giving spending advice to rich people who are running up big bills that become unmanageable?” I asked in amazement. It was the amazement of someone who grew in the Bronx (the Highbridge neighborhood) and has never made and will never make anywhere near $600,000 a year. “Yes, certainly,” he replied.

Living with a budget, or some kind of spending plan, is a vital part of the MoneySense philosophy. Without a budget or plan, you’ll end up reaching into your pocket again and again for your credit card to pay for various things. Often, you’ll spend with no idea of whether you’re putting yourself into dangerous territory until the damage is done. Later, when the card company sends you the bill, you’ll ask yourself: “How did I ever run up such a bill and how can I ever pay the entire bill at the end of the month”?

For millions of Americans, the answer is they can’t, at least not in the short term.

Indeed, the long-term trend among American households has been to go deeper and deeper into hock. It is a trend we see in many other Western countries. Here in the states, over a 63-year period after World War II, the ratio of household debt to disposable personal income dramatically rose, according to Federal Reserve Board numbers.

“The ratio of debt to equity was $18.6 billion to 97.5 billion in 1945. By the third quarter of 2008 it had reversed big time, with $10.6 trillion of debt stacked up against only 8.5 trillion in equity,” writes George Melloan in “The Great Money Binge, Spending Our Way to Socialism.”

Some 16 percent of households had more debt than equity in their homes, he added. That means they were likely to default because the average household’s income was being overwhelmed by debt. Those numbers have improved for many over the last decade but one should always be on guard for the dangers of excessive debt [For more on America’s debt woes, please see “The New Depression. The Breakdown of the Paper Money Economy,” by Richard Duncan, pp 88-92 (John Wiley & Sons, Singapore, 1992)]. It a reasonable bet that many of these people rarely budget.

Will These People Ever Dig Out?

It will take many of these debt-plagued households years to dig out. Some never will. The math is against them. Many ran up the debt through credit cards. They are trying to pay down their bills with something on the order of a 20 percent interest rate added to it.

As I write, millions of American households are still trying to recover from the woes of the Coronavirus of 2020 or from the crash of 2008. Many have houses that are “underwater.” The equity in their houses is less than the debt owed. So it is still very important to learn the lessons of troubled times.

The most important is those who budget, those who understand the extent of their bills and prepare to pay them off each month, don’t have that burden. The difference between these two types of people is the difference between walking somewhere carrying bags of heavy groceries as opposed to walking somewhere carrying nothing or very little.

Who would you rather be?

The difference between the latter and the former is tremendous. It is the difference between happiness and misery.

It is the difference between lying awake wondering how you’ll ever pay your bills or having a good night’s sleep, secure in the knowledge that your financial affairs are in order.

It is the difference between MoneyMadness and MoneySense.

And one of the ways to arrive at MoneySense is understanding savings. They can ensure one can survive hard times. More on that next chapter.

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Gregory Bresiger
Gregory Bresiger

Gregory Bresiger is an independent financial journalist from Queens, New York. His articles have appeared in publications such as Financial Planner Magazine and The New York Post. The eBook version of his latest book "MoneySense" is available now for Free Download by clicking HERE

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