We have already discussed balancing your income and expenses and how important that is. We have learned that most people try to improve their financial situation by acquiring more income, but that this doesn’t necessarily lead to more financial space. We will now explore the effects of lower you spendings. If you can get by with less, you will have some money left right now, but you also be protected against financial bad weather.
Spending and Income
Let’s get in a bit deeper. The amount of money you have left at the end of each month, is simply the difference between what you have spent that month and what you have earned. Increasing your income should lead to more “leftover” money, but as we have seen, it is hard not to also increase your spending. And anyway, since your income is most likely to be more or less fixed, what can you do to make more money? You can ask for a raise, and maybe you will get it, but once you are used to your new income, things will be just like before. It is very likely that you can have more influence on how much money you spend, than on how much you make.
OK, so the easiest way to improve your spending/income balance is by simply spending less money. We will see how you can do that later in this article, but first lets address the issue of being protected from financial adversity. In fact that is a real no-brainer: spending less means that you could get by with less income. Let’s hope you never have to, but if you would lose your job or get sick or have to work less hours for personal reasons, it is nice to know that you can continue to live your life the way you are used to. Knowing how to control your spending will make you much more resilient and resistant against catastrophes. Who knows, you might even be able cut your spending down to a level where you “part time” retire…
How to save money?
Spending less, cutting your expenses, that’s what it’s all about. But how? And on what? It’s not as hard as you might think: you just have to spend your money on the right things, those things that bring you value and quality in your life. Do not buy stuff that you is going to end up in your attic within a couple months, no matter how desirable it is. Think twice before buying things on an impulse, simply force yourself to wait another day before buying something that you didn’t plan to buy (don’t be too rigid about this, though: if you can buy something unexpectedly for a great price, and it is something you wanted in the first place, just strike a deal and buy it!). Also check out these great tips to save money right now.
If you buy things, always try buying them at the best available price, or at the best available price-to-quality ratio. Do you really need that expensive Starbucks coffee every day? Try doing your groceries at the cheapest store, even if look less pleasant to shop in. Remember, all the extra’s in a store have to be paid for, by you! Clip coupons. If you fill up your car, do it at the cheapest gas station.
Here’s a tip that might help you make better buying decisions: If you want to buy something, calculate how long you have to work to earn the money that it costs. Is the item you want to want to buy really worth that much of your valuable time? If it is, buy it. But if it isn’t…
The Internet is full of tips to save money. You will find some links here very soon…