The first step on the path to financial abundance is to spend less than you earn. While this may seem simplistic, a large portion of our consumer based society does not follow this step. While some people, living in true poverty, cannot follow this step, many Americans have simply chosen not to follow it. Because of this choice, the average American family now has over $10,000 in credit card debt.

Financial abundance is a product of our choices. If we choose to take the path to financial abundance, the first step must be to create “excess earnings” by spending less than we earn. “Excess earnings” are simply the amount of earnings that remain when yearly expenses are subtracted from yearly income. For most people, “excess earning” amounting to 15% of after tax income is sufficient. If 15% is not possible, start with 5% and add at least 1% more every three months. In 2 ½ years, you will reach the 15% goal.

To assure that you meet your “excess earnings” goal, I recommend that you “pay yourself first.” If less than 15% of after tax income is withheld for your company retirement plan, on each payday “pay yourself first.” Into your “excess earnings” account, put the difference between the15% total and the amount withheld for your company retirement plan. The “excess earnings” account helps begin your journey to financial abundance.

If you have any credit card debt, the first use for your “excess earnings” is to pay this debt. This will require a consistent application of these funds to your debt, combined with a significant reduction or elimination of further credit card purchases. Remember, if you have $1,000 in credit card debt, you likely pay $200 or more per year and receive nothing in return.

Once you have paid off your credit card debt, the next use for “excess earnings” is to build an “emergency fund.” This is an account, with highly liquid assets, that can provide 6 to12 months of income when a short term emergency occurs. With an emergency fund, if you are laid off from your job or are temporarily sick or disabled, you will have adequate savings to withstand this “emergency.” Without an emergency fund, you might be required to prematurely withdraw funds from your retirement accounts. This approach has short term tax penalties as well as the long term consequence of diminishing the funds available to fund your retirement.

Once you have paid off your credit card debt and built an emergency fund, the excess earning fund can be used for a down payment on your first house, for your children’s education or to help fund retirement. The next steps on your journey to financial abundance can only begin after you take control of your spending.