The one ridiculously simple way to achieve any financial goal

Financial statements are the first very powerful step to personal wealth, and the foundation of financial health. Most people are convinced that their incomes are too low, that they don’t have enough money to cover their needs: but too often, the truth is that they spend money in an irrational way.

Example 1. David Bach, an American writer and researcher into people’s spending habits, created the famous concept of the “Latte factor”. After analyzing the host of small habits which make up our everyday life, he suggested that our daily rituals, such as drinking tasty, aromatic coffee in a nice coffee bar, can lead us to financial bankruptcy. But we simply do not realize this. If our employer cuts our pay, if there is a leap in the price of flights before our holiday, or if our business income drops, we perceive this immediately, and readily understand the negative and destructive impact it can have on our domestic budget.

But plenty of our habits exert a terrible, incredibly destructive power, because we are not aware that over a period of time, they can cost us a real fortune! Did you realize that if you drink your favorite coffee in nice cafe on a daily basis, in 30-40 years you will have spent enough to buy a luxury yacht? Can you calculate how much money your everyday habits actually cost? Do you know where the boundary lies between needs and wants? In the course of our financial journey, we will find out the answers to these questions, and many, many more.

Example 2. Dr Andrzej Fesnak, an outstanding financial advisor and author of many financial education projects, told me that most of his clients don’t know what has happened to 25% of their monthly expenses: they are genuinely not able to work out what they have spent ¼ of their monthly income on. The same data can be found in many newspapers, film reports, interviews and blogs about financial literacy across Europe, the United Kingdom and the United States. This model of our expenses – you may know of it – can be called the “IHNI WMMI Factor”. Meaning? – I Have No Idea Where My Money Is! How on earth does such a strange thing happen to us?

In short, it is a result of the nature of our current civilization, and the quality and ideology of much of contemporary culture. Cultural researchers and economists alike call it the Consumer Culture. This means a huge proliferation of marketing tools and media messages are working on our minds, creating a new variant of human being, who believes in the power of possession. To this person, his value is based on the number of credit cards he holds, the houses and cars lent in credit by banks, the number of facilities he owns at home, the size of his DVD collection, and the number and amount of purchases he makes per week. The only thing that counts is what I have, and how much I spend. The more I spend, the more important I become – of course only in my imagination and in the imaginations of people who share the same (self-)destructive value system.

If you too believe that this kind of lifestyle equates to personal wealth, read about the habits of real millionaires. We will talk about this further during our course. But for the moment, do you know that really rich people – what real wealth means will be discussed in “Models of a Well-Planned Financial Life” – tend not to buy new cars, but used ones, and prefer to eat at home, instead of in a restaurant? And that they never take on consumer credit, but rather only make investments? If you have difficulty understanding this, it is likely to be because your entire world, including your family and best friends, has influenced your mind in such a way as to turn you, or threaten to turn you, into a fanatical, desperate consumer.

Do you know that a lot of people believe that the measure of their value in society is the amount of credit they take on? Higher credit and a higher cost of living equal a higher position in society. Is this miscalculation really possible? Of course. Why? Because we too often make this fundamental mistake about our financial standing: we mistake “I look like I am rich” for “I am rich”.

This basic misunderstanding is the reason for our irrational financial decisions. In our minds, wealth is associated with what is visible, what we can see and what we can show. What is invisible doesn’t exist. That’s why we prefer expensive cars than profitable financial investments. That’s why we don’t like saving, and love spending. That’s why we dream of being perceived as a rich person by others, instead of invisibly building our fortune, through investments, savings and businesses, step-by-step.

And most of all, we don’t care for the unfashionable (or old fashioned) habits which rich people tend to adopt: sandwiches instead of lunches in good restaurants, used cars and houses from the second-hand market. If you have imagination and a modicum of skill, don’t you think that sandwiches may be tastier and more stylish than lunch served in a restaurant? Yes, of course, this is quite possible. And also healthier. But above all, it may be a tenth of the price. The same applies to hundreds of other things, for example used cars. What is the difference between a new Jaguar or a new Mercedes and a 2-3 year old Jaguar or a 2-3 year old Mercedes? There is probably not much difference in value, because these cars and similar famous, reliable brands keep their quality and prestige after 2-3 years. But what about price? 2-3 year old cars are up to 40% cheaper. Added to these are many other small or not so small regular habits where our choices are the result of the state of our emotional health and the level of our financial IQ. How then do we define these habits – and start controlling them?

One of the most powerful weapons for creating wealth is a financial statement. If you start immediately, as of here, as of now, to develop a habit of using financial statements on a daily basis, you will soon start to feel better and more confident about your money. The financial statement is at one and the same time the simplest and the most demanding activity you can undertake.

Why the simplest? Because all you need is a small notebook and a pen, and later on, after the first few weeks, a good spreadsheet for better management of personal financial data.

Why the most demanding? Because it requires systematic, daily work, commitment and discipline. Which of us nowadays likes devoting time to boring, systematic work on our spending? And yet, if you want to rise out of debt and/or achieve financial freedom, you first have to stop thinking about your life as an opposition: I like vs. I don’t like.

Our world is no doubt a paradise for pleasure-minded people. However, if pleasure is all that matters in our lives, we can’t become rich, but we will remain poor. “He who loves pleasure will become poor, whoever loves wine and oil will never be rich” (Book of Proverbs 21:17)

I know very well the havoc that the demons of procrastination can wreak. They will do all they can to get involved in lots of interesting things, instead of focusing on the nitty-gritty of financial statements. The temptation will be great especially at the beginning, when you are still inexperienced in this routine, even though it requires no more than 15 minutes of your time a day. Don’t worry. Don’t be discouraged. Even if at the start you find it a little bit difficult, soon, with practice, it will become easy, and extremely beneficial for your finances, and your life generally.

“I shall never be good at anything if I do not do it in a disciplined way”, Erich Fromm suggests in his excellent book, ‘The Art of Loving’. “Anything I do only when ‘I am in the mood’ may be nice or amusing, but I will never become a master in that art.” [pp90-91]. And so, Fromm continues, discipline becomes crucial. “It is essential, however, that discipline should not be practised like a rule imposed on oneself from the outside, but that it becomes an expression of one’s own will; that it is felt as pleasant, and that one slowly accustoms oneself to a kind of behavior which one would eventually miss, if one stopped practising it.” 

This also shows up another substantial issue, and invaluable lesson: If you don’t harmonize the financial dimension of your life with other aspects of your life, that is, emotional, personal, family, professional and spiritual, you will never be really rich. During our course you will see why your personal finances should not be separated from other aspects of your life.

And this is the time to decide to start creating financial statements every day.

  1. Starting today (not tomorrow or next week, not from the beginning or end of the holidays, not after your anniversary or the beginning of the New Year – you must do it starting as of now!), you need to collect receipts and take notes of your spending.
  2. Write all figures down. If you like music, and wish to drop a pound or two in a talented busker’s cap, don’t forget your noble gesture, but include it in your financial statement.
  3. The list of your outgoings should be compiled very exactly. If you buy clothes, or food, note down exactly what it is: e.g. a pair of Levi’s 501s (blue), a plain white t-shirt, a pair of black cotton gloves, two pints of milk, a small bag of brown sugar, a full English breakfast. If your categories are too vague, your insight into your expenses, and what you can learn from them, will not be detailed enough.
  4. After Week 1, prepare a good spreadsheet, for example in Excel, and collate all your data in an electronic version. As you will know, Excel is excellent for counting and preparing advanced databases under different headings (monthly, yearly, marriage, family, etc.)

Example of a monthly family budget:

INCOMES collects all sources of income, for example main salary, internet sales, extra Saturday job, rent from a room. Anything which brings in money.This table shows a model of expenses which applies to a family. Please note that this household decides to give 15% to charity, and set aside 20% for emergency capital and investment. In the first part of “Model of a Well-Planned Financial Life” you will find a very profitable, efficient and safe, percentage model of a family budget.

This table shows a model of expenses which applies to a family. Please note that this household decides to give 15% to charity, and set aside 20% for emergency capital and investment. In the first part of “Model of a Well-Planned Financial Life” you will find a very profitable, efficient and safe, percentage model of a family budget.

Let’s look at the next element of the (same) monthly domestic budget:

As part of this same financial statement we would also find entries for credit payments, food, insurance, card debt, and unforeseen expenditure.

Each financial statement is different, obviously! And our own financial goals can differ significantly from month to month. Sometimes the goal is to survive extremely stressful times, when facing job difficulties or business bankruptcy. At another time it may include an investment plan, or the necessity of helping out family or friends. However, the basic rules are always the same. You must control your finances, earn and spend consciously, according to your own set goals and plans. Otherwise you will find yourself controlled by chaotic and irrational, emotional impulses. You can always choose between beneficial financial decisions, whereas financial impulses which lead to debt, and more debt, are a result of a chaotically uncontrolled life.

Please also note that you should never leave yourself without money at any time. Never. It doesn’t matter how much you earn, or how much you have to spend to meet the cost of living. You must always have some money available, because our world is based around money, and financial transactions. This means that being without money may leave you in severe danger. Remember this whenever you are tempted to spend money on something that is not really necessary.

Daily financial statements should be summarized weekly, then monthly and yearly. You can be sure that you will find out plenty of amazing information about your habits, and even your personality! But above all, it provides a good economics lesson. When you earn and spend, you participate in the global market. If you are married or in a stable relationship, you have a great opportunity to build up strong personal bonds between you and your spouse or partner. This relationship also gives you a chance to develop a more mature outlook. Did you know that financial troubles are one of the most frequent causes of divorce?

Another great benefit of regular financial statements is pre-financing. Most of us lose money all the time because of post-financing, especially when we take out an expensive loan, or resort to credit cards with higher rates of interest.

What then is pre-financing? This is when you know what your long-term financial plan is, and if you get to know the simple financial operations involved, you can save a lot of money, and a lot of stress. Let’s take a look at an example:

Let’s say you know that in 4 years’ time, you will need to spend more because there are going to be some special events in your life. You need to make money available for:

  1. Two special family parties: your son will be 18 years old, and you wish to celebrate your 20th wedding anniversary with your wife and friends.
  2. You want (finally!) to buy a new car.

(You are also aware that during this year there will be holidays, Easter, Christmas, and 52 weeks, with 52 Sundays, 52 Saturdays, 52 weekends, 52 Fridays evenings – and no doubt a lot of other occasions for spending money!)

Let’s say that you estimate the total cost of your extra expenses for that year, outgoings which are one-off and require special planning, to total £11,559.

How much will you have to invest now, to have that £11,559 ready in 4 years, if – say – you find a financial opportunity which gives you 7.8% per annum? You will have to invest £8,555.44 now.

£11,559 – £8,559.44 = £2,999.56. So, if you think clearly about your future, and apply your knowledge and imagination, and you are able to plan (which means: envisage yourself in the future, and work out how to achieve it), you can save yourself £2,999.56.

On the other hand, what if you don’t give a thought to your future spending and end up paying using credit cards or bank loans? If you borrow £11,559 for 10 years, and pay 16.9% interest per annum, you are signing up to lose £12,460.30 in the future!

£11,559 for 10 years, at 16.9% interest, means monthly payments of £200.16 x 120 (10 years x 12 months) = £24,019.30. The bank gave you £11,556, but after 10 years you will have repaid over twice as much. Well, that certainly amounts to good business – but for the bank, not for you.

Most of us pay huge rates of interest, and are rarely conscious of how much we lose in the process. But the great thing is to know how money works, and how to use cumulative percentage to our advantage. When Baron Rothschild was asked about the 7 Wonders of the World, he said that he hadn’t seen any of them, but he did know an 8th Wonder: compound interest.

Nowadays money comes from your… head. If you give thought to your own financial education, and develop your financial IQ, you can achieve a lot, and create considerable wealth – or at the very least, avoid financial stress and debt.


  1. We often concentrate on how much we earn. But how we manage our money is in fact much more important.
  2. If you don’t control your money, you are very likely to find yourself in big trouble. Sooner or later, this trouble is likely to start controlling you. At the moment, you are probably conditioned if not controlled by marketing, media and shopping. If that is the case, it is high time for a change to your way of thinking, and planning.
  3. Wealth is the combined product of financial literacy, spiritual and emotional health, diligence, creativity and the ability to plan and consequently realize your plans in action. In short, permanent wealth is based on a combination of a strong self-image and financial skills. Trust me, these two factors are enough. You will see this further explained during our course.
  4. If you want your finances to become a source of pleasure, and not of danger and stress, you will have to find your own effective model of thinking and acting.
  5. In the present times, only continuous financial education and purposeful personal development can lead you to real wealth.


Andrzej Manka


This article is a part of an Online Personal Finance Planning Course: How to make your money work for you! Enjoy the journey throughout our course and please share your thoughts with us and others below!

Opinions about the Online Personal Financial Planning Course: How to make your money work for you!

“Andrzej Manka has put together an excellent personal finance primer for anyone interested in personal finance management. I was very impressed with the overall content and the specific advice provided.”

James L. Paris, Best-Selling author of more than 10 books including “Money Management for Those Who Don’t Have Any”.

“This course is an excellent resource for anyone wanting to gain control of their financial life. The hazards are real, the financial sessions solid, and the charts handy, if you find yourself dwelling on a few of the verses at the end of the sessions that might not be such a bad thing.  Of course, the primary task is to get started managing and growing your financial future. Andrzej Manka’s guide will certainly help you take forward steps on this exciting journey.”

Elizabeth Ann Lawless, #1 Amazon best-selling author, publisher and speaker, Dallas, Texas, United States of America.

Andrzej Manka

Latest post on blog