As hard as it may be to believe, there are people in the world who spend money without saving any. No, these people are not filthy rich and do not live inside of a bubble. They are everyday people who have not learned how to save their money or plan for their futures. As a result, they are sinking in debt. Thankfully, this habitual behavior can be remedied.
Identifying the causes
In order to change one’s spending and saving habits, the person must first identify the cause of their overspending. There are several reasons that a person will spend money without ever thinking of saving any. Those reasons include an easy access to credit, a need to feel good, and a lack of impulse control. Once these causes are identified, then they can be dealt with, and the savings process can begin.
Keep track of money
One of the first things that will need to be done is to find out how much is being spent and where their money is going. This is done by keeping track of all the money that is spent. How? Keep sales receipts. These can then be analyzed. Store receipts actually reveal a person’s spending style. After some examination, then the person should be able to identify where they are wasting money.
Distinguish wants from needs
The next thing a person who wants to save money will need to do is to distinguish the difference between wants and needs. It is easy to get wants and needs confused. The compulsive spender should begin to ask themselves which things are absolutely necessary like paying the light bill and purchasing groceries, and which things are not like purchasing a daily cup of cappuccino. They will then begin to distinguish between necessities and luxuries. Once this is done, then the compulsive spender can begin to design a budget and a personal savings plan.
Set savings goals
The next step is to set saving goals. Once spending habits have been analyzed, identified and dealt with, then the cause of uncontrolled spending can be addressed to meet savings needs. How much money is needed for savings, and how to start a savings plan can also be determined at this point. Once a savings goals has been, then a personal budget that focuses on saving is more possible.
Designing a budget focused on saving
Designing a budget does not have to be complicated. Computer programs or simply a pencil and some paper help with this. Begin with income, and then list each bill and its amount. The next step is to subtract the bills from income. The amount that is left over after the bills are paid is the amount that can be allotted to savings, entertainment and other financial goals.
Visualize
Another important step in the process of learning to save is to visualize. For example, visualize accomplishing savings goals and what it would be like. Visualization helps to bring clarity to the person’s goals and makes the goal easier to achieve.
Yes, a person can learn to save. It just takes dedication and financial education.