Only one? Only one mistake to fix? I wish. I probably am making all five. If that applies to you, then I suggest we all should pick one and start there. At least then, we’ll only have four major problems to confront every morning and at 2am, when our credit card bill has awoken us from our sound slumbers.
The article that inspired this one, by Bruce Hopkin, also included some questions you could ask yourself to ascertain if this is your particular problem.
Good luck amigos.
Problem #1: Spending Without Knowing Your Limits
How can you spend, if you don’t know how much you have in the bank to do so? It’s a pretty quick way to get yourself into financial trouble, that’s for sure.
Like in everything, knowing your limits is the best possible way to succeed. Write down your income less taxes in one column and your imperative expenditure. Once you know the difference, you can work out how much out of that you will need to save. The final number you have will be the amount you have left to save, which doesn’t necessarily mean you should spend it all.
Problem #2: Spending it all
I love spending it all. I am currently sporting a new baby-pink beanie, with a bow, that I love to death but couldn’t really afford because I love spending it all. The thing is, I can’t have it all when I spend it. If you are earning an income, you should be able to save some of it. It may seem boring and dull, but if you don’t, you’ll end up not being able to foot the bill of an emergency or having no savings to your name when the time comes that you want to buy a house or a car.
Save 10% of your income. Save 20%. Just get a target and go for it. Starting is always the hardest part.
Problem #3: Not Knowing How to Save
Saving requires dedication and discipline, but it’s not brain surgery. Saving includes steps as easy as; resisting the impulse to buy just because it’s there (don’t tell this to my new beanie, I really did need it, it’s cold up here in Katoomba), buying because it’s on sale or buying because you’ve got some status ideas in your head.
Set up direct debit, and deduct automatically from your income. If you don’t buy something, put the money into the savings account. Work out an account that will pay your higher interest if you stay above a certain amount of money.
Problem #4: Spending without satisfaction
There are lot of good feelings that can happen when you shop, if you’ve done all the right things. There are also a lot of feelings of guilt, if you’ve stretched your credit card or dipped into your savings. If you budget properly, can pay in cash and really want the item, then enjoy yourself. You could get yourself a baby pink beanie too.
Problem #5:Spending without care
Spending without any consideration for your future is not wise, and it’s not the path to happiness. Watching savings grow may not have the instant thrill of a new handbag, but it does have a deep satisfaction attached to it. Thinking of a future without financial fear is a happiness in itself, and it’s not all that hard to achieve.