Saving and spending are habits. Both work against each other and the one that you feed the most is the one that will dominate. If you develop a spending habit, saving will be so difficult and on the other hand, if you develop a saving habit, spending will be limited and your finances will be so flexible and manageable.
Both saving and spending go hand in hand. As much as spending is important, you also can’t live without spending. You have financial obligations such as recurring monthly bills and the expenses that goes towards your basic needs such as food, clothing, shelter, and health.
The level of success that you can achieve financially is influenced by how much you save on a consistent basis and how much you spend as well. People know how important saving is yet are struggling to do so. Saving and spending has nothing to do with how much are you receiving every month but rather on how disciplined are you. Your attitude will spell the difference between success and failure in your finances. The dilemma that most people face is that even they know how important saving and smart spending is, they haven’t developed the discipline to do it. Developing a saving mindset and attitude is much harder than having a spending one. However, once you’ve developed an inclination towards saving, unnecessary spending will become difficult as well. The rest of this article is all about some tips and steps on how to develop your saving attitude and limit your expenses.
1.) Analyze your attitude towards finances. It is very important for you to know where to start. Many people know the importance of saving yet failed to look at their selves as to where they really need to improve and in the end, fail to start because they don’t know what to fix about themselves in the first place. Notice your saving and spending habits. How much are you saving monthly? Are you consistent? How do you spend? Where do you spend a lot? Are you an impulsive buyer? Do you spend more on wants than needs? These are just a few things that you should consider before planning to do something. Getting to your destination needs recognizing your destination because if you just keep on doing things just for the sake of doing it and not really having a good reason on doing it, you’re going nowhere.
2.) Recognize your priorities. Now that you’ve already realized where you need to improve the most, set your financial priorities straight. In doing that, make a list of all the things that you really need and if possible, include the cost. In most cases, your needs doesn’t cost much. People spend a lot more on wants than their needs and because they haven’t set any priorities for their finances, they fail to realize that they are wasting so much money. If possible, make savings as your priority. Saving 10% of your cash flow every month is a good start. After setting aside for the savings, make a list of the bills that you are paying. Having a list of the recurring bills will call your attention on how to reduce these bills. In most cases, bills can be lessened. The amount left is the amount that you can enjoy.
3.) Set goals. Goal setting is very important in almost everything. Goal setting will make you realize what you really want. It gives meaning to your journey towards financial security. However, set realistic goals. Some people fail in this part because they set very high and unachievable goals. If you want a million dollars, you can never have it in just a month by saving 10% of your monthly income. Setting goals means making a budget for your expenses and making savings targets. For example, after 2 months you can increase the amount that you are saving every month from 10% to 15% while decreasing your bills. Developing the habit of saving money takes time so set realistic and achievable goals. But take note, achievable doesn’t mean that it should be easy.
4.) Be consistent. Always stick to your goals and financial plan. If you are saving 15% a month for the past 6 months, continue to do so or if possible, further increase it to 20%. Consistency is very important because if you’re consistent, even if you save just a small amount every month, it will accumulate in the long run into a very significant sum. For an illustration, for example you are earning $100 a month and save 10% of it for the past 3 months, 15% for the next 6 months, and 20% for the remaining 3 months for the year. In one year you have saved $180 which is almost the amount that you receive in 2 months. Since developing a habit takes some time, consistency is the key in developing it. Consistency is the constant repetition of one thing and it is very important in developing a habit.
5.) Expensive doesn’t mean quality. In most cases, expensive items are because of the brand, not the quality of the item. There are a lot of cheaper alternatives that are of the same quality and in fact, there are a lot of cheaper ones that are of better quality than expensive ones. Choosing the better product requires research, dealing with one’s emotions, and fighting the erroneous mindset that expensive is better. People by default have spending mindset and worse, people think that those who spends more are richer. Everybody wants to be rich or at least show to everybody that they have money. They do it by spending too much and flaunting those expensive items that they have bought. If you have a saver’s mentality, you know your priorities and you know that saving is far more important than pleasing other people. After all, knowing the power of consistency, you’ll be in a lot better place financially in the long run than those who are so busy trying to keep up with the Joneses.
Good habits are hard to develop but they are all worth it. Developing the habit of saving takes time and a lot of attention but once you’ve instilled such attitude in yourself, saving will be a lot easier and spending could be controlled and will become much more manageable. Always keep in mind that you have to discipline your emotions because emotions normally trigger spending. If you control your emotions, you can make saving a lot easier, and you’ll be on the right path towards financial security.