It’s easy in theory, but where to start when you don’t have that habit? We are used to living above our standard and often resort to borrowing in various forms or taking loans from family and friends. Is it familiar to you?
Yes, it’s a habit that builds like any other. It is scientifically proven that it takes time to build a certain one. How much is debatable. Most experts advise that the minimum is 21 days. I advise putting a more extended time limit and sticking to it regarding finances. Let it be at least three months in our case.
And so. We’ve decided we can’t do this anymore. That you’ll never raise the money for your dream house or car or whatever else you choose. Every day we are bombarded with all sorts of offers, Black Fridays, vouchers, Christmas is coming, a child’s birthday, mother-in-law’s birthday, and so on ad infinitum.
Well, let’s get started. Let it be from today. Determine what you can set aside from your monthly income or, if your income is weekly or daily, from each payment. My advice is to be a minimum of 10%. And don’t wait until you have money left at the end of the month. Do it as soon as you receive your income. Create a checking account if you have no money saved, not an emergency fund. Set aside 10% of the income there and forget about the case. Now allocate the rest of the income to pay bills and the rest to daily needs. Remember to look after your pleasure and hobbies too.
But, before we make any expenditure, do I need this? I already have ten coats and 50 pairs of shoes, do I need the 50% off ones from the new collection? Who do I want to impress with them, and do I need to?
If I’m addicted to shopping, ask yourself what’s behind it. It is undoubtedly filling an internal deficit, and we need something else. If you like something, wait a few days before buying it. Likely, you will then forget about it and find that you do not need to own it. In most cases, we spend emotionally. And emotions are a temporary state unless we have a fixed idea.
And have you heard of minimalism? It is very current, in which the essential thing is that less is more. There is a lot of information on the subject.
And whether we should necessarily spend money to entertain ourselves or our children. Have you noticed that young children enjoy everything and most often play with things that are not toys or even less are not expensive? So are we adults. Even if we buy the most expensive things or homes, we get used to them after a few months, and they stop bringing us the same joy as in the beginning. And so we get into this vicious circle of earning more money to buy more things that we ultimately don’t need.
You can think about how to get rid of the old stuff and make money out of it before buying a new one.
Saving
Let’s return to the topic of saving to build into a habit. Once you set aside at least 10% of your income, you shouldn’t be tempted to spend on unnecessary things. When it’s been a few months since you’ve been saving, and you’ve already got money in your bank account to cover your running costs for between 3 and 6 months. Congratulations! You now have an emergency fund. It is the first step in structuring and managing your finances. This is liquid money you can access at any time, and it is good to cover your unforeseen needs through it. For example, if you or a family member needs treatment. Car repairs, home renovations, and so on. It is controversial here whether breaks fall under running costs or should be covered by the emergency fund. It all depends on if they are regular if you plan well, how big your income and emergency fund are, and the amount of vacation. The size of your emergency fund also depends on how secure you feel in your regular income. Whether you are on salary, on commission, whether you run a business, and how big your family is.
For example, if you plan to buy a new car and have a larger emergency fund, I advise you to finance the purchase this way. But in any case, do not strip your account to 0. After all, everything happens, and you may need surgery, or why not a business opportunity? You’ve just spent it all, and you’ll be backed into a corner and waiting. What if you need help getting a loan right now?
What if you hate your job you go to and look forward to Fridays or vacations? If you get fired at that exact moment? Do you have someone to rely on? What if the one you rely on passes away or you get divorced? There is also a plan B for these cases, but that is another topic.
And if we measure money in time? How much time have you secured? How many months can you live if you have no income? Is it worth spending money on this exact item and working on what we don’t like just because we don’t have money saved?
Imagine how you would feel if you had enough money for unlimited time. Would you lead your current lifestyle? Would you live where you are now? Were you going to be with that person, were you going to interact with that customer, or put up with your boss?
Nowadays, to live, in most cases, we need money. Unless we have built an independent life from the system. Do you know such people?
And in conclusion, this is the first step towards building our saving habits and living a better and more independent life. But let it not be at any cost. Let’s not count everything to the penny and limit ourselves excessively. If our income is too low and we have no more to save, then let us consider increasing our income, our qualifications, and the value we give to society. If our bills don’t come out at the end of the month, then we’re not doing things right in general.
We can also think about changing our homes, cars, and city.
And remember that the wealthiest people don’t appear to be so. Let us live in abundance, but let it not involve spending money all the time. Let’s set ourselves that we always have money to meet all our needs and be thankful for what we have and who we are.
Wealth, in most cases, is in the intangibles!
