Saving is great, but your savings and salary will never be enough unless you curb your expenses. For example, on a debt management website one couple were struggling to pay their bills on a combined salary of £100, 000 ($200,000), but another family managed on £10,000 ($20,000). Why is it that two people struggle on ten times the amount that a family of four can manage just fine? Expenditure!
1. Buy what you can afford
If you remember nothing else in the money section, make sure that you remember this. Sometimes debt isn’t our fault, such as when a bank raises interest rates because they ‘need the money’, but most of the time debt arises when we spend money that we just don’t have. I believe that if you want something bad enough you’ll wait for as long as it takes to get it. Apply this to the expensive things on your shopping list. Do you really want those $200 jeans? If the answer is yes, make sure that you have budgeted for them. they’ll still be there in a few weeks, and cheaper. If not, you’ll have saved up enough money to buy a better pair by that time.
2. Buy what you NEED not WANT
To curb your spending even more, especially if you’re in debt, only buy what you need. Before you purchase an expensive item, ask yourself: Do I NEED this? By ‘NEED’ I mean, is it impossible to live without? Things on the ‘NEED’ list would include: food, water, electricity, gas, travel fare, the monthly bills, and toiletries. Things like clothes and shoes can be included, but always ask yourself if they could be repaired instead, and if not, buy affordable clothes instead of expensive designer ones. Remember that ‘cheap’ looking clothes can be jazzed up with a sewing kit, beads, and sequins. This also guarantees that no one else will be wearing the same outfit as you.
3. Small cash withdrawals
Always take precautions at cash points. Don’t withdraw money late at night, and if you do go with as many people as you can. Take a good look at the cash machine before feeding your card in, and report the machine and go somewhere else if it looks suspicious. Cover your pin number as you enter it, be aware of who is around you, and put your money away before you leave.
Okay, on to the money saving bit. Only withdraw the amount that you need at that time. For example, if you need Â£7 for your friend’s present, withdraw the minimum amount allowed like Â£10. If you take out Â£20, you’ll find yourself spending a lot more in the shops, and then you’ll end up back at the cash point before you know it. I know it’s tempting to withdraw more, but if you need more later you can always come back.
4. Credit cards as the last resort
Getting into debt is bad enough, but credit card debt takes it to a new low. Now it seems like the cards are your friends, but when the card company want payment and it’s then that the interest rears its ugly head. You’ll be paying off the debt, but it’ll barely make a dent in what you owe because of the interest swallowing the money. AVOID using credit cards unless it’s an absolute EMERGENCY! Think of the worst case scenarios e.g. you find yourself stranded in a foreign country and don’t have the cash to get home. After the emergency, pay off the card debt ASAP.
5. Rarely treat yourself
Living on the bare minimum can be slightly depressing when you see others going on holiday, buying a new car or house, and doing other fun, expensive things, so treat your good behaviour on the RARE occasion. By ‘rare occasion’ I mean once a month or every other month, otherwise your spending may get out of control and interfere with your saving/budget. It’s up to you to choose whether to have a big treat on the rare occasion or smaller treats more often.
6. Are you unhappy?
Some people shop because they’re unhappy. They buy enough clothes, shoes, and gadgets to fill a small apartment, but still yearn for more and more and more and….If you’re a ‘big spender’ take a good look at your life. Are your material possessions trying to fill a void? If so, now is the time to improve your personal life because nice outfits, gadgets, houses, and holidays cannot replace family, friends, good health, and anything else that may be missing from your life.
You do not have to earn $100,000+ to live comfortably. It is all about what you owe in debts and how much you spend. Those ‘splash purchases’ are not worth the hassle at the end of the month when you must scrimp together money to pay for essentials i.e. water, gas, electricity, and the mortgage/rent.
If it is not essential, it can wait!