As I walked down the Main Street this morning, I found some loose change in my jeans pocket. My first thought as I looked at the coins was how I could spend it. Coffee? Newspaper? Then it struck me. I could just keep on walking home, where coffee and internet access awaited me and save those coins. Which led me to think- do we spend money just because it’s available? And why, regardless of how much money we have coming in, do we always match our incomes? Here’s how to break the trend, and save the extra money you have.
If you suffer from the same tight finances regardless of how many raises you’ve had in the past couple of years, then you’re not alone. It’s even been assigned a name- Parkinson’s Law. In the original Parkinson’s Law, he was describing the way way work expands to the time we have to do it in. A task that could take up an hour can easily be done in three hours, if that is the allocated time.
The same is true of our finances. We get a raise, and think that now we’re on easy street. Instead, in a couple of months, we’re as broke as we were before the raise. Why? Because our expenses now match our income. It’s so easy to do- we relax our hold on our finances and allow a couple of treats- a subscription to Foxtel, a new table and chairs set. Before long, we’re living to our income.
Change The Tune: Live Below It
Instead of Parkinson’s Law, try the Micawber principle. Basically, it stands thus. Income, twenty dollars. Expenditure, nineteen dollars and fifty cents. Result, happiness. Income, twenty dollars. Expenditure, twenty dollars and fifty cents. Result, ruin. It’s a basic principle, but one I, and many others, find difficult to live by. The difference between a relatively easy and stable financial set up, and one that is all uphill, is having a buffer between income and expenditure. In other words, room for saving.
Ways To Live Below Your Income
Which brings us back to the start- do you spend any money that is available? Changing that spending habit is the fastest way to put some space in your budget. If you have money left over at the end of the week, for three months, try putting it in savings. Even more simple, if you find money in your wallet, put it in a jar at home. Forgotten notes in the back of your jeans, likewise. You’ll be amazed how easily you can get by without noticing the extra savings.
Here are some other ways to live below your income:
– Calculate how much you need to reduce expenditure by, and what might constitute the difference. A gym subscription? One meal out at a restaurant a week? It could be a simple task to find the difference on a weekly basis.
– Take your savings out first. Instead of seeing what’s left over at the end of the week, why not automatically deduct your savings as soon as your pay goes in? That way, you can try and live at a lower rate, as opposed to trying to save the money throughout the week.
– Bank your raise. Every time you get a raise, send it somewhere else. Deposit the extra money into a high interest savings account, or into mortgage repayments. You could live off your income once, you should be able to continue doing it and the savings will be significant.