Money is scarce and that’s what makes it valuable. For as long as you don’t have a money-bearing tree in your backyard or a magic lamp that produces money when you ask for it, then it is time for you to be careful with your earnings. Otherwise, you risk being like me who wished it rained money at our home.
Just like other successful people, you must make tough choices when it comes to money spending decisions. You must be able to keep your financial goals in mind when you spend money. That is the only way you will start creating a millionaire mindset or even a billionaire. Why not?
Many people depend on a monthly salary to survive. That is the only income available to allocate to all their expenses. Take a look at this pie chart representing Tom’s monthly income, and how she plans to spend it. He has allocated his income guided by his expenditure needs. He has allocated everything and has no pie left.
What does that expenditure mean for tom? It simply indicates that Tom does not have anything left to save at the end of the payday. He has not been able to save part of his income for his goals. Think about how you always allocate your salary. Would you have any slice of the pie allocated to saving for your goals?
That is one of the toughest questions to pose to salary earners because it is never easy to decide the best way to spend money. It is even much more difficult to make sure you have money left for your goals at the end of every month.
In this article, I have put together a few tips that will help you to reduce your expenses and save more to achieve your planned goals. These will also help you to become a wise spender.
Learn to Differentiate Between Needs and Wants
Sometimes you can look at something you bought and wonder how you ended up making such a decision to buy it in the first place. The most probable answer could be that you wanted it and not because you needed it to live.
Spending decisions are always tough to make. You have to analyze an expense to determine whether it is a want or a need. If your monthly bill says it would be smarter to buy an android smartphone, then the idea of buying an expensive iPhone can be postponed or even abandoned.
When you earn money you quickly think about a list of things that you can spend money on especially when you have no spending plan. These may include healthcare, lottery tickets, sports betting, a home theatre sound system, motorbike, makeup, soda, or wine. To be a wise spender, you must differentiate between need and wants.
Wants: The things that are optional. They bring you comfort but are essential and you can even survive without them.
Needs: things you must have to live a decent life.
After you have met the needs, your extra savings should be used to pay back your debts faster, invest in education for your kids, save for emergencies, and save for your goals. One way to save more is by reducing your wants. You may also reduce your needs like using less electricity and wastage of water by closing the taps when you are not using water.
Save Money for Emergencies
Certain events in our lives are abrupt and we must attend to them. For example, when you become ill, you have to go to the hospital. This is what makes saving for emergencies an urgent need for you. Everyone can save even on a small income saving will help you in times of emergencies. It is security for you. When a business opportunity comes, your savings will be useful. It is a key to achieving your goals.
Learn How to Deal with Expectations
Your friends may expect you to buy a new shirt on the market and your parents may want you to throw for them a big party as they celebrate their anniversary. It is also possible that your girlfriend keeps asking you when you will marry her. much as saving is a need, it is always not as easy as it sounds. You may feel that pressure when it comes to spending decisions because your family expects a lot from you.
With so many expectations, you have to make the right spending decisions without disappointing your parents, and friends. The anniversary may not be postponed but you can advise your parents to plan for a smaller event with fewer invites. For your friends who expect you to spend on trendy things, remember your goals are more important than showing off.
More still, for household expenses and family food, you have to deliberately agree on a monthly amount that covers expenses and allows you to save for your goals. You might have to buy a present for your girlfriend by considering less expensive items. It is the thought that counts. With those strategies, you will be able to overcome spending expectations for family and friends.
You need to know that when you have an income, you are responsible for making wise spending decisions. Have a very firm stand when it comes to distinguishing between your essential expenses (your needs) and those you can live without (your wants). Always still to the plan before you even withdraw your salary from the bank. You can also reduce your wants and needs as much as you can to save for your goals.
Be Confident and Communicate
Remember that saving is a need. It is one way to ensure that you have security in case of any emergencies or even a business opportunity. Be confident to tell everyone in your family and friends that you started saving for your goals. Saving is the key to achieving the goals you have set in your life.
You can start by deliberately writing down four things you should do to be a wise spender like reducing needs, saving for emergencies, communicating with friends about your savings plan, spending less on gifts, etc. you can even print this on the wall either at home or office in a strategic place as a reminder for your commitment.
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