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Concept

Controlling expenditures

Controlling expenditures is Clason's second cure for a lean purse: what each of us calls necessary expenses will always grow to equal our income unless we protest. The protest is a deliberate limit on spending, set before the income arrives rather than discovered after it has gone.

The mechanism is quiet. A raise arrives, and within three months it has been absorbed by a slightly better flat, a slightly better phone and a habit of taxis, without anyone deciding anything. Lifestyle rises to meet income because nothing stands in the way, and the person on the higher salary feels no richer than before. Clason's cure is not austerity but attention: distinguish a real need from a desire that has dressed itself as one, decide what your life costs before the money arrives, and treat the difference as yours. In modern form this is the conscious spending plan, four numbers set in advance, and the rule that half of every raise goes to savings on the day it arrives. The point is not to spend less on everything; it is to stop the automatic expansion so that the surplus exists at all.

A real-life example

A software team lead in Istanbul gets a thirty percent raise and, six months later, cannot say where it went: the new flat, the car, the restaurants that came with the new colleagues. At the next raise he sends half of the increase to the savings order on the day it lands and lets his expenses discover only the other half. A year later he is, for the first time, richer after a raise.

How to use it

  1. 1Write what your life costs per month before the next salary arrives, and treat the rest as not available.
  2. 2When income rises, move half the increase to savings the same day; let spending adjust to the remainder.
  3. 3Every quarter, look for the expense that quietly became 'necessary' and ask whether it is.