We are taught to manage
our finances while we are still kids. Our parents give us an allowance and see
how we distribute our money throughout the month or week. Then when we move out
during our studies, we have to pay bills and buy food so managing finances
becomes a bit more difficult. Then we start to live in a home of our own, where
there are all sorts of other bills and repairs to worry about, so staying
within your budget becomes even more difficult.
If we are not careful,
we can easily end up having money problems and this can lead to a very
stressful life in the future. Furthermore, we live in a time of consumerism, so
a lot of people out there are trying to sell you things you don’t even need,
but they are making compelling cases so that you end up becoming a customer.
Due to these reasons, managing finances becomes more challenging, so here are
some tips that can help you become more frugal.
Plan
out how much you are allowed to spend
Alright, one of the
most basic mistakes one can make when handling salary, is to adopt a “go with
the flow” point of view. When you get your paycheck, it would be wise to have
some sort of basic budget plan i.e. a rough estimate of how much you can spend
on a daily basis, so that you can go through an entire month living fairly
comfortably.
Once you have that, you
should by no means spend the entire daily budget, since you are bound to face
unexpected expenses and you’ll need an emergency fund. Also, this daily budget
is a good starting point for future financial strategies. You’ll need to find
different ways of increasing your daily limit and challenging yourself to save
more.
Do
not be financially dependent on other people
Of course, if you are
going through a bad financial patch, chances are you will borrow money from
friends or family. However, you should not allow this to become a habit. Being
financially dependent on other people makes you one step closer to financial
suicide.
Truth be told, you
might not borrow much and your close friends or family won’t mind you borrowing
some money, but this is more of a personal issue. If you constantly need to
depend on other people, then you have a problem that has a rather simple
solution. You can either spend less or find a way to earn more.
We live in a world
where earning a bit extra cash is really not that hard, it’s simply tedious.
You can complete surveys or install apps that you can use to earn money online
and then can cash-in later. If you continue to rely on others from one month to
another, it will only send a message that you refuse to solve your problems and
this can leave severe consequences in the future.
Do
thorough research before important decisions
It is important that
you do not make any big investments without thorough research. You can visit
different types of agencies and speak to different financial advisors, but bear
in mind, that these people can have a vested interest when they tell you what
to do. If the advice is not coming from a close friend or a family member who
genuinely cares for you and who is well-versed in money management, don’t
immediately adhere to it.
You can do online
research and find more accurate information this way. Of course, the people who
tell you how to handle your finances are also online and will probably advise
you the same thing there, but there is a difference. Google has its own base of
trusted websites, and there are always ways to check if sites are trustworthy.
Here are some explanations on how to do it, but you can find even more online.
These big decisions are
usually loans and these loans are sometimes a necessity, because it is
unrealistic to expect that you can simply pay for an entire house with cash.
So, at one point you might need to get a house mortgage. When someone explains
to you how this whole process works and you feel that the explanation is
oversimplified, then chances are that, the person has a vested interest in your
investment.
It’s important that you
are vigilant and that you explore all of the other options before you go
through with this type of decision. Here is a good guide that can help you gain
a deeper understanding of mortgage rates; make sure you go through it if you
plan to buy a new home, or if you want to be a real estate investor.
Another important thing
to remember is not to turn to the payday loan industry. These are also known as
predatory loans, because their interest rates are ridiculously high. They only
offer a quick solution, but everyone ends up regretting their decision due to
the astronomical interest rates.
In other words, if you
really need a loan and intend to pay it back, then it’s far better to borrow
from friends or family. People usually end up borrowing money from others, or
pawn their possessions in order to return payday loans and they could have done
those things in the first place instead of taking that loan.
Use
money management tools
I have already
mentioned how you can use apps to earn money, but you can also use apps to save
money. There are apps that can calculate your expenses and give you good
financial advice, but it’s always better to seek a financial advisor you can
trust. However, there are apps which can help you get coupons or discounts in
stores.
They will also provide
you with insight into which stores currently have discounts, sales etc. These
are really useful and with a good shopping strategy you can save a lot of
money. It’s also important to know that some of these quality apps come at a
price, so you should only buy them if you absolutely need them.
In other words, if you
are already having a hard time managing your resources and have debts, then
these apps won’t do much good; they will only be an additional expense. On the
other hand, if you want to create a good savings strategy, then buying them is
a good idea, since they will eventually pay for themselves.
Use
saving tactics
When it comes to saving
money, there are so many viable tactics out there that you would be surprised.
In this section I will only list some that I really like, but as mentioned you
can find a lot more online.
Weekly challenge:
Basically you set the amount of money you wish to put aside each week (it can
be N500, or N1000). Then at the end of the week you put that amount in a piggy
bank or a savings jar, but at the end of next week, the amount needs to be
doubled and so on.
So, if you go for N500
then, next week you place N1000, and a week after that is N2000, and the last week
of the month is N4000. You reset the amount at the beginning of the next month.
Also it might be better to place the
money in the jar at the beginning of the week, so that you know you cannot count on it.
Wait for a discount on
general goods, like cleaning products, toilet paper, toothpaste etc. Then feel
free to buy these goods in bulk and you won’t have to spend money on them in
the near future.
If you need new
furniture, check out sites like freecycle.org to see what you can get free of
charge.
Instead of buying
cleaning rags, you can save your old clothes that are no longer wearable, and
use them to clean floors.
Follow customer
incentive programs, get discounts or get points whenever you can, since you can
save some serious cash this way.
Before you go shopping,
write a list and stick to it; don’t be tempted to buy anything you don’t need.
In any store, the most essential items are usually in the back, so that
shoppers are tempted by expensive products they do not need while they are
walking to the back of the store to buy what they came for.
Learn how to repair
clothes so you won’t have to toss it away at the first signs of wear and tear
and you can also earn some extra cash if you monetize these skills.
Buy light bulbs that do
not use as much energy as regular light bulbs, they last longer and even though
they are expensive, they will pay for themselves and save you money.
Once you manage to
accumulate a fine amount of resources with these saving tactics you can invest
in things like solar panels and a tankless water heater, since these will also
save you money in the long run. Moreover, in case you want to discover more
saving tactics, you can use websites like thesimpledollar.com, and you can find
some good tips in this article as well.
If you go through the
links, you’ll find out that if you choose to live healthier you’ll also save a
lot of money. We all spend too much on food and if you learn how to prepare it
yourself, you will eat better and spend less.
Furthermore, if you buy
bottled water, you should stop and buy a filter for tap water; this way you can
drink tap water and you won’t have to buy it from the store. Also, if you
carpool with your colleagues from work, you save the environment and money that
would go on gas. In other words, we spend a lot just to have a bit more
convenience and we don’t really need to sacrifice much to save quite a bit of money.
Eliminate
minor but unnecessary expenses
Finally, you must never
forget that we live in a world that is dominated by micro transactions. These
are really tricky, since you can’t argue that someone is trying scam you and we
have almost no issue with small fees, so we part from our money lightly.
However, one small
subscription after another and you start to lose a significant amount of cash,
and you barely notice it. These small subscriptions are very often for a
magazine, for account maintenance, for private network channels or cable
channels etc.
In reality we rarely use these services, mostly when we are
bored and quite frankly there are other ways to be entertained. It only seems
cheap and convenient with these subscriptions, but in the long run, we end up
regretting the decision when we find out just how much we could have saved. The
point is, you should not fall for micro transactions for products you won’t use
frequently.
As you can see, being
more prudent is not that hard. All it takes is some effort and minor life
changes, but there are long-term benefits for those willing to apply them. Make
sure you go through the links in this article, as they can tell you how to save
and how to think before investing, and they can also help you earn a bit extra.
Remember to operate
within the borders of your daily budgetnand to invest in items that can help
you save more money in the future. If you manage to do this, you should be just
fine.
Source: Lifehack
#Edited
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