I think the first time I started budgeting my money was when
I graduated from college. Money borrowed from the government for educational
and “miscellaneous” purposes were spent at an alarming rate during 4 years so
it was a perfect time to educate myself about basic finance. And a good choice
it was! By making right choices and saying “no” to many material possessions
that I “wanted” not “needed”, I was able to pay off my hefty student loan in 3
years and put some money away for travels. Yes, I was fortunate enough to live
with my family and do not pay rent but let’s admit there are plenty of young
women and men who manage to accumulate debt even when they are given an
opportunity to get ahead financially- in this case living at home. Having said
that, I strongly believe that in today’s world you won’t be able to get ahead
financially without knowledge about personal money management including a
proper budgeting.
Set goals for your
savings. For instance calculate how much you need for that long planned
trip to Hawaii and see how much you have to put aside a week/month to reach
your goal! Maybe you have a home renovation project in mind? It’s a lot easier
to save if you can visualize your “destination”.
Create a budget and stick
with it if just for a month or two. This is the best way to get a clear
perspective on your financial situation and figure out what are your spending
habits.
Set a direct deposit-
if you don’t see it you won’t spend it! I discovered it when I was on the
salary job at the bank. The money was deducted the same day my salary was
deposited into my account. I didn't miss the money and I was pleasantly
surprised to see accumulated sum after a few years!
Don’t be a “scrooge”
instead learn how to spend your hard earned cash wisely. Always think twice before making a purchase.
Invest in good quality things- buying cheap clothes/shoes rarely pay off.
Decide for yourself where you can splurge and where you can save. For example I
will never buy cheap jeans or jewellery but I will do my own
manicure/pedicure. Dining out on a
regular basis is a habit of many but it can also be quite depleting on your
wallet.
Spend money on
“experiences” including travel. If you have a choice- try to spend a good
chunk of your savings on “experiences” rather than material things. It is a
proven fact that we get a longer lasting happiness from actually experiencing
life be it an adventure travel, a sporting event or a cooking class. Plus
experiences create memories for many years and we rarely regret it unlike some
impulse purchase at a department store.
Don’t try to keep up
with the Joneses. Our desire to buy is constantly fueled by media/promotions/advertisement.
We are being tricked into believing we need something to look and feel better.
Moreover, we often try to keep up with neighbors or co-workers forgetting that
it is an infinite race. Everyone should follow their path in life when it comes
to spending money: there is no “one fits all” scenario.
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