Wednesday, November 27, 2013

How to Effectively Save More than You Spend



The golden rule in saving—and you are bound to run headlong into this saving advice wherever you look whenever you ask how to effectively set aside piles of money for a rainy day—is to save more than you spend. Oh, but frugal living takes a great deal of sacrifice, you would say.

And you would be right. Even as you begin to try, you would find yourself chased by nagging doubts on whether or not it is even—at all—possible. You would not be the first person to have this problem. In fact, experts on human behavior have offered some eye-opening explanations on why it is so difficult to save and so easy to spend

We equate buying things with happiness. The more you buy, the happier you get. This is not exactly true but for many people, it is. Whenever you feel sad or depressed, have you ever gone on a shopping and dining binge, hoping to feel better? Maybe you did feel better, but do you remember how long it took before you were dissatisfied again? Discontent stems from wanting more and it is human to always desire for more. If we give in to those desires all the time that is really when the trouble starts. 

We have developed bad spending habits. You might have picked up bad spending habits from your family, and some, you probably developed on your own. Like most people, you might have gotten so used to struggling with money that it would take an active decision and a series of consistent, concrete actions to really get you started in the habit of saving—and for you to have any hope of sustaining it at all. 

We are putting up with appearances. Some people seek and find gratification in buying things that are not really necessary. They spend on things they believe would earn them the admiration, esteem, and in some cases, even envy of their peers. Then, there were credit cards, and it became easier for people to put up with appearances—only to fall deep into debt. If you think this description fits you, it would take some serious re-wiring of your mindset—and habits—before you change. It might be hard but it is possible. You just have to have the resolve to change.

Living Well, Spending Less

The following are some effective ways to help you save more than you spend. If there is one saving advice you should always remember, let it be to: spend less, save more. Make it your mantra and think on this every time you are tempted by the convenient use of your credit card or the delicious appeal of a huge store sale. 

Start small. 

If you are deep in debt, more drastic measures might be needed for you to bounce back. But if you are not too thrilled about the idea of frugal living, try to cut back wherever possible. Do you really need a big house or an expensive car? Can you perhaps prepare packed lunches or switch to more affordable brands when grocery shopping? As you begin to see how much you are actually saving from making small adjustments, the prospect of being able to save more would seem more and more appealing. 

Review your bills. 

How many utility bills do you have to pay for in a month? Can you perhaps live without one or a couple of them? See if there are optional services you can eliminate—like your monthly cable subscriptions, for one. It might be more beneficial if you revert to basic services and eliminate add-ons that you do not really need.

Create a budget and stick to it. 

Start by writing down a list of your monthly expenses. Then, create a budget—one that takes your monthly income into consideration—that allows you to take care of all basic necessities and still give you a chance to set aside a small percentage of your income. Seeing everything in writing shows you the bigger picture and makes you think twice every time you take out your wallet to pay for something you can always just live without. 

Go for energy-efficiency.  

Electric bills take up a significant percentage of your income. See if you can cut back on electricity use by installing some energy efficient fixtures or adjusting your habits, like not leaving your computer or the air conditioning machine on for all hours of the night.

Be more proactive. Maybe frugal living is not the solution you are looking for. It could be that you really do not earn enough. Try to find ways to boost your income. Apart from your skills, what you do with your time also counts. Time is an investment as much as money. Stop wasting away the day—be more productive. Assess whether your skills are being put to good use and if they are not, perhaps it is time to go for more rewarding endeavors such as looking for better opportunities or starting a small business.

About the Author:

This article is prepared by Michael Vincent of  for walau2u.blogspot. Compare Hero is Malaysia’s leading financial comparison website, where users can compare a broad range of financial products for free.

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