The urge to spend money as soon as the bank credit notification hits your phone is unavoidable. This is why people go into debt and end up jeopardizing their monthly budgets. In this article, we will go over some of the benefits of internalizing this habit, how you can master it, and what you can do to expand your overall income as well. Let’s begin!
One of the best feelings in the world is to be debt-free. In this hyper-consumerism society, we tend to spend on things we can’t afford in the first place, putting us in debt for the days to come. Being in debt, no matter how menial the amount may be, is a bad position to be in as it takes over a portion of your future income. So avoiding debt by only spending on what you can afford is the first major benefit that comes from this life-saving habit. Once you start spending less, you’ll notice surpluses in your budget that you can start saving for some necessary major expenditures. Start a rainy day fund, start saving for a bigger car for your family, save for things that matter and you’ll ensure a comfortable life for you and your loved ones. Apart from this, having your finances under control can lead to a healthier and stress-free life. You are then also able to explore more opportunities, make fruitful investments, and enjoy your life by just having financial flexibility.
Now that we have gotten you pumped up about why you should spend less than you make, let’s focus on how you can actually do this. The first thing you should do is to classify your expenditures into needs and wants. Needs being the necessary expenditures you cannot survive without such as utility bills, foods, rent and clothing. Wants on the other hand are additional expenditures that add value to your life, but are not essential for your daily life. This can get subjective, as a Netflix subscription, which apparently is a want, might be an essential need for some people. Identifying these, ‘wants’ helps you in shortlisting expenditures that can then be reduced or removed altogether. One way to understand how essential one expenditure is in your life is through the “what if” method. What if you ate out less in the week? What if you cancelled your subscriptions to dozens of magazines? What if you did not buy the latest Nike runners? Now all you have to do is to abstain from those things for a week or a month. If you realize that these things did not add any real value to your life, and you can live a comfortable life without them, then just cancel them out of your life for good. Another critical step in this regard is to understand your weaknesses. Some people might be habitual of buying coffee on the go from expensive stores or be used to impulse shopping. I for one find myself trying out different fast food every single week. Working on habits having a detrimental impact on our finances and health will make it easy for us to take on beneficial habits like this one. Moving on, collaboration is key when it comes to two people sharing finances. You won’t be able to spend less if there are only one-sided efforts, because of which you need to get your partner on board and have a similar mindset to undertake this massive commitment. Finding cheaper alternatives is also a smart way to reduce your overall expenditures. If you drive yourself to work, consider carpooling or public transport. Consume less energy around the house by installing more energy-efficient systems. Select a more cost-efficient cellular package. Avoid buying movies if you can easily rent them out. All of these require some thought, and with the right research, you can definitely identify areas of cost reduction.
Spending less is one thing, but at the same time, you should also aspire towards earning more than you currently do. Step out of your comfort zone, establish strong connections with people at work and in the industry, learn new skills to make yourself more valuable, start a side business if you can, and most important invest the money you saved from reducing your daily finances.
With the correct combination of cost reduction and income expansion, you can ensure yourself a more financially secure present and future for yourself that you have always dreamed about. Good luck and happy savings.
Hello there! I am a Senior Business Analyst with a passion for writing, philosophy, design and life's adventures.
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