2016 May 1
by Anuki Premachandra
If I ask you what’s the toughest thing you find about money, you’re bound to tell me its the difficulties you face trying to save up. For some reason, it’s impossible. Something or the other gets in the way. The list of the things you have to do with your money would go on and on and on. Why is it that even at the beginning of the month you promise yourself you’ll save a certain proportion off of your salary, you only end up saving much less than you initially wanted to?
Have you, like me, sat down and wondered how in the world some people earn so much money and are so successful that they can actually afford to spend lavishly at the same time? Have you wondered if they too, go broke towards the end of the month like you and I?
I’ve been doing a bit of research and have come to the conclusion that the first step to a successful life is learning how to manage your expenses. Guilty of being an unapologetic shopaholic that I am, I decided to formulate a list of things you and I could do to help us manage our money a little better.
Millionaires like Steve Jobbs to Richard Branson to even Donald Trump have a unique way of thinking that has obviously gotten them to the places they are now in life. Here are five tips to help change your perspective to help you the next time you make your financial decisions;
- Identify what you essentially need and what you would like to have
Alright, so this is your grade 8 Business Studies lesson, needs are things essential for living, wants on the other hand, are things we like to have but are not essential for living. Now look back at your last month’s finances, the wants exceed the needs don’t they? Now, you know where you went wrong. Alright, see the fine dining dinner you went to, that’s not a need. That’s a want. Sure you can argue with me saying that food’s a basic need. But here’s the catch, the minute you spend lavishly on a need, it turns into a want. A new pair of shoes, a new handbag, a new phone that was launched only a few days ago, ask yourself, are you really doing your bank account a favour by giving into impulse decisions?
- Stick to a budget
This is the next most important thing that most of us forget to do. When making your monthly budget sheet, divide your money for spending and saving right at the start of the month. If you’re on a fixed income, try and stick to a constant pattern of spending and saving. If you aren’t, try and allocate your figures after putting much thought into it. Once you know how much you need to sped and save, stick to your budget. The first thing you need to do the minute you get your salary is to transfer to your savings account the amount you’ll be saving for the month. After that you can allocate your money among your expenses.
If you have trouble sticking to a mental budget, consider using an app. There’s loads of apps that’ll keep track of your expenses for you. If you aren’t the person to worry yourself with the hassle of having to manage another app, then like me, you can save it as a memo on your phone. Whatever way you decide to save it, remember to keep updating it as and when you make a purchase. So you know exactly how much more you’ve got left to spend for the month.
- Have more than one source of income
This is another go-to rule for most millionaires. Have you noticed that nearly every successful person you know own more than one company. No matter how successful his/her ventures are, they manage more than one company. You don’t have to be a super-rich investor to have multiple sources of income.
You can maybe free-lance for some firm or explore work opportunities online. You can maybe tutor your colleagues or friends or simultaneously manage to work for more than one company at the same time, it’s really not as hard as you think it is, I know loads of people who do this.
See, when you have multiple sources of income, you know you are financially secure. When one avenue fails, you’ve got another. This can also help you not go broke towards the end of every month. The minute you have other sources of income, you are more likely to always have money in your wallet or your bank accounts.
- Avoid debt
This is crucial to long term success. No individual, business or country can run on debt. Look at Sri Lanka, they’ve predicted that the economy would go into a downturn sometime very soon because of the debt spiral. Try to not borrow money as much as you can. Having multiple income sources and having money saved up from earlier can help avoid this.
Your credit cards can put you in a ton of debt so it’s suggested to stay away from them. But see, on the other hand, most credit cards offer certain percentages of cash back services and always offer higher discounts than their adjoined debit card would. My solution is to use my credit card as if it were a debit card. Confusing isn’t it? Alright, so what you do, is you transfer a certain amount of money to your credit card for expenses, as per your budget. Then you make it a point to only spend equivalent to the amount of money you’ve transferred. See, bingo!
- Focus on the long term
I’m not going to deny, having self-control regarding your finances is a crucially impossible task. But you need to focus on the long term. You need to keep telling yourself that you’re not doing this for your present self but you’re doing this so your future self will be thankful for it. Thank ahead. Think smart.
