Many of us are conflicted about our financial affairs. There simply isn’t enough money to go around, or is there? For starters, it’s important to understand the difference between needs and wants. Certain things are required such as food, shelter, transportation, Internet, healthcare, et al. However, other things like vacations, fine dining, expensive vehicles, beach homes, and the like are wants. This disparity leads to internal conflict. The question is: How do we balance our budget to lead a fulfilling life where wants and needs are satisfied?
That is the point of departure for this exposé into How to Develop Money Saving Habits That Will Stick.
A word that often pops up in these discussions is frugality. This term is more than just a way to manage your money; it is a way of life. Frugal people live well, not lavishly. They use only what is needed, and save the rest for a rainy day. This concept is extremely beneficial with money matters. Given that there is no such thing as job security in the modern age, it behooves individuals to live well beneath their means in order to pave the way for the future. Provided all your needs are taken care of, a frugal lifestyle can assist you in saving up the necessary resources for the uncertain times to come.
How do you live frugally?
Red is Equivalent to Abundant Supply and Blue to Minimal Supply
For the purposes of illustration, consider a human being who finds himself stranded in a blizzard in the middle of winter. The body will do everything necessary to keep the core nourished and protected. All the organs are priority #1, but the extremities (the digits) bear the brunt of it. In much the same way, a tight budget requires you to take care of only the necessities – the bells and whistles, finer trappings, and luxury items will not receive any of your budget.
The first step to a truly frugal existence is acceptance and acknowledgment of the limited supply of your financial resources. When you stop living on other people’s money (i.e. credit cards, personal loans, business loans, and other lines of credit) you quickly learn what is needed and what isn’t. A limited money supply is the most sobering reminder of your current situation.
When income streams are limited, the available resources must be directed to only the necessities. So where do you source the necessary information to develop money savings habits that will stick? There are many resources, including money savings tips for dummies, reliable blogs on saving money, expert advice of financial planners, and financial analysts etc.
Common sense goes a long way for money savings
Everyone wants to learn from the gurus and the people who made a fortune over their lifetime. However, there is no substitute for common sense when it comes to saving money. The golden rule is as follows: Never spend more than you earn. Everybody should be able to put something away at the end of the month for savings purposes.
This money should ideally be invested in a growth-oriented, interest-bearing account. While interest rates in the US, UK, EU and Japan are currently low or negative, there is still room for growth over the long-term. 401(k)s, Roth IRAs, investments in cryptocurrency, treasury bonds, and equities are long-term market beating investments. Another way to save money is to pay off your mortgage quicker by adding more money into your monthly repayments. By reducing the amount of interest you’re spending, you’re paying down your principal quicker, and enjoying a quicker time to property ownership.
When it comes to big-ticket purchases, shop around. Everybody wants your money; therefore you should always take the best deal, and not the first deal that comes your way. Make retailers, wholesalers, and brokers compete for your patronage. You are the big fish that everybody’s trying to hook – not the other way around. In a subdued economy, people with disposable income are like gods among men. Bear that in mind every time you are thinking of splurging, and you will quickly find that your budget moves from the red into the black.