(Originally published on August 24, 2011; reprints previous original material published in this section)
By Jordan Patente
My mother moved to a new address recently. She had to organize a lot of things before moving to the new house, and the most challenging part of moving was transporting all her knickknacks. I saw a lot of unused items still in their original packaging. These are pieces that do not fit her lifestyle and just occupy space in her house. Summing up the cost of all those items, she could have already bought a brand new bed.
Most of us complain about not having enough resources to fund our lifestyles. But if we look closely at our expenses, we’ll find that we’ve been investing in a lot on things we don’t need. Not a lot of us are aware of our spending habits.
Who doesn’t love red-hot specials? I know friends who mark their calendars to anticipate the big event. Some prepare their credit cards and borrow money, while others purchase items they feel are badly needed at that time.
There are thousands of good deals out there and if you are not strong enough to turn down temptations, you’ll be an impulsive buyer. I know colleagues who enjoy shopping so much that they let expenses control their lives.
Who said your earning is not enough for you to meet both ends? Who said the amount of money that comes in is more important than what you’re saving? I know a lot of employees who earn well and spend bigger than what they earn every month. Regardless of your earning capacity, how you deal with money defines your present and your future.
Below are some of the tips that you could use to control bad spending habits and start saving:
Make a list and stick to it. You have to be organized when shopping. Create a list and religiously follow it. This will help you avoid unnecessary purchases. The list is created to identify items that you need, and if it’s not in there, then it is unnecessary.
Follow a mandatory waiting period. When you see something you’d like to buy, rather than buying it on the spot, force yourself to think about it for a week. We normally want something with so much emotion the first time we see it, but think—do you really need it? After a week, you will realize if it’s a must-buy, or forget about it altogether.
Avoid shopping on payday. Most people feel richer on payday and are more vulnerable to frivolous purchases. Set a working budget first before you go shopping. This will set a limit to your spending so make sure you stick to it.
Pay in cash. Numerous studies have shown that when people pay in cash rather than their credit card, they tend to spend less. This is because using cash makes spending more real, and the money harder to part with. If you still opt to use your card, every time you use it, set aside your cash payment or pay your provider the day after.
Wait for second-generation gadgets. When it comes to buying the latest high tech gadgets, it makes sense to wait. Most technology decreases in price after it is initially released. Later versions usually have fewer bugs and better capability. Most of your current gadgets have all the functions you desire, so think wisely if you need a new one or just save the money for better use.
Set and focus on your goals. Knowing what’s important to you and what you really want to achieve with your money will help distract you from short-term wants.
Always begin with an end in mind. If discipline and control over your spending is a must to achieve your greater goals, do it. Saving and achieving your goals are just the effect of good money management. What you learn from the process is priceless and will give you boundless opportunities in return. Bigger goals, once achieved, will help finance your wants in the near future. For now, maximize your hard earned money by multiplying your fortune, not your liabilities.
These are some of the benefits that you’ll get when you follow these tips: you’ll see your savings grow, you’ll feel great pride in controlling your spending, and saving will become second nature.
Jordan Willy Patente is the president of Dynamic Empowerment Philippines and has been a success coach for five years. He has also conducted motivational talks and directed musical and theatrical productions.
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