Every cent you DON’T spend is money you have to spend another day. More than that, because you save the money you don’t spend at the convenience store, fast food joint, etc., you can SAVE money, compound it and have even more to buy something you really want later on.
Many of us nowadays fall into the category of robbing Peter to pay Paul. We put things on credit cards to do the things we want to do NOW. And that’s where it all starts to go wrong. You spend $10 on something on a credit card on just one item, and we all know you are spending $10 on many items in a month. Then you are charged 20 percent for the privilege of having the item now. Is it worth it? Most people don’t connect the dots. That’s a lot of money you could be saving just by putting off spending small bits.
If you put off that purchase and save that money, you not only SAVE the amount of the purchase, but you save on interest that is charged on the borrowed money AND you save interest you earn on money you put in the bank or into another investment. It’s a snowball effect.
Oprah Winfrey, voted time and time again as the most influential woman in America, has rules on how she spends her money, particularly regarding credit cards. A lightbulb should be going off in your head right now. This is a woman who can walk into any store and buy anything she wants, and yet she has rules on how she spends money on credit. Given her financial state, she’s a good role model to follow. Her caveat regarding credit cards is to never charge a meal on a credit card. The idea is that by the time the bill comes around, you have nothing to show for it. You use it, and it’s gone, but you’re left with a bill you’ll be charged 20 percent interest on. Conversely, she says, if you have to pull out cold, hard cash to pay for food, you will be very mindful of the amount of that burger. Eliminate that, and you eliminate the finance charge, so you’ll have money to save.
Money is all about either/or propositions. If you buy “x,” you can’t afford “y” a month from now. If you saved those initial months (didn’t buy a coffee from the drive in each morning, didn’t get the candy bar from the convenience store to get you through the afternoon, etc.), you’d have enough to buy a CD at the end of the month. Keep that trend going, and maybe in a year you can buy the TV you’ve been wanting but always seemed beyond your grasp.
Don’t cut it out all at once because you’ll never stick to it for the same reasons people don’t stick to diets. People don’t like to feel deprived. You work hard for your money all week, so you feel like you should be able to reward yourself. And you should. So, cut out small things at a time. You’ll be taken aback by the fact that after a while you don’t miss it.
Now look at your lifestyle. You will be amazed at the amount of money you are paying for things you don’t use. Perhaps you have a cell phone package that includes unlimited texting when you only use it for emergency phone calls. You may have added the text package while your kids were growing up and just never got away to modifying it when they moved away. Evaluate everything, and treat it like found money.
Keep a separate spot to save that money initially. It’s not really enough to invest yet, and keeping it on hand will give you a visual of what you can do by giving up just a little. Maybe the prospect of being able to save enough to buy a cruise is enough to get you to quit smoking. It’s a win/win situation.
About once a month, but it in the bank, but put it in a place that’s not so easy to get to. As more time goes on, you can start investing it in places beyond the neighborhood bank. All of a sudden that morning cup of coffee has turned into a share of stock. That share splits and you have to. The money you save is working for you, saving even more money.
With money the adage: out of site, out of mind is paramount. The more you keep YOU away from your money, the more you will save for another day.
No comments:
Post a Comment