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Monday, November 24, 2014

Ways to Spend Money Wisely

Way back before I was stripped off of innocence, it was just as expedient as smiling to my parents and uttering magic words for me to get what I want. Growing up, I would still depend on their wallets for mine to be filled. Spending what I have without the fear of going bankrupt was undeniably predictable. I guess it went along with innocence and the thought that I’m their responsibility that makes it all, well, fairish. Only now that I’m all grown up have I fully understood that money can somehow be particularly elusive. Then there’s the reality that it’s temptingly facile to spend money than to earn it.

Being a middle class citizen of this economically striving society gives me much of an advantage (sarcasm paired with optimism). I get to see how money flows in three directions; upwards when you start achieving your dreams and finally living a fancy laid-back got-money-in-the-crib kind of life, straight when everything is just plain neutral and you walk amongst the average, or it could be downwards which is bankruptcy, scarcity, famine, drought, or something that might include the sewers and a life like hell with pockets filled with dirt if not holes. Most people treat money nowadays like it’s a god on earth, heck the aforementioned three directions are not even out of irony. The reality is that when you don’t have money, you would possibly go crazy (like Miss Linda endlessly yodelling along the busy streets).

One important thing to avoid in spending money (other than wasting it on gluten) is going bankrupt. Doing this might not get you Bill Gates rich, but it could totally make you impeccable from financial misery (or you can just live as a monk and avail of the tantamount perks). You can avoid bankruptcy by spending money wisely, and you can do this in a lot of ways.

     Start budgeting

You don’t need a degree in order to do this, but people still find it so darn hard to create a budget. Spending is indeed a pleasure, and you have got every right to enjoy what you have earned, with this you must also learn how to keep track of your expenses. There’s not wrong in being a budget conscious dweeb, uh, just know how to organize things. Make it a habit to monitor your bills and purchases, as well as to be aware of your financial situation. Don’t go all out on a party when you’ll be going on a hunger strike the next few days because you ran out of monetary allowance.

Purchase something because you need it, not only because you want it. Kids usually have this habit of pointing out at something in a store and going on tantrums forcing there folks to buy it for them, then after a few days they would just throw it away or eventually get tired of using it. That’s excusable, most kids are stupid. You are no longer a kid, I suppose. You can’t go on tantrums to get what you want anymore. You might even end up in an asylum if you’d even seriously do so. The point is, just keep in mind that the money you’re about to spend is something earned through hard work and should not be wasted on trivial things. Something that you want now would not be the same thing you would want in the long run. Something that you need would surely be something that contributes to your well-being. Thus, choosing what you want over what you need is nonsense.

Window shopping with a bunch of friends is one thing, actual shopping with a friend who has got taste you are sure to admittedly get tempted with is a nuisance to your savings. Most of the time, it is just better to shop alone. You bring a list of the things that you need to buy, and easily avoid those that would just add up to your expenses. It would also be helpful if you decide on what to buy in advance, or canvass first before you make any purchase. Impulse buying can lead you to regrets. And when you’re buying, you should be wiser than the marketer. Sure you can listen to advices from sales clerks, but be sure to spend your money on the right items. A pretty good marketing strategy could lead you off course your budget, and cause you to let go of unexpectedly higher amount of money.
Know where to buy the things that you need for a bargain. Usually, some items that you see in shopping malls can just be found in bargain stores with half the price on the tags. You should also keep an eye on sales and discounts, you can surely save a lot from them. Personally, unless I really need to, I don’t buy much at malls if the item’s price is not discounted.

     Distinguish liabilities and assets

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Simply put; liabilities are things that you are responsible for, things that cost you money, time and effort (cliché, huh), assets, on the other hand, are things that are useful and have value, owning them would be advantageous for you. Let me provide you examples through a corny story (which you ought to still read):

There’s this man who lived with his beloved wife, they did not own any estate nor were they employed to any company. They just humbly engaged into running their own business, bread-making. As for abode, they only rented a house. The man started “investing” on furniture (necessity), and appliances (uh… depends) ranging from flat screen TV with family theatre to modern computers. Their business ran smoothly until they had a baby (a blessing, of course). The “rented” house became fully furnished with more modern appliances. Take note, they’d got bills for electricity, water supply, internet, and rent. Then their family started growing, two, three… eight more children to feed and educate. Eventually, the money they’re making from the business did not seem to suffice. They were still able to survive though, and a couple children graduated from high school. They were indeed happy and contented. So the man, as generous as he is to the family, kept buying them gadgets and forms of entertainment. They still “rented” a house, which didn’t have much space anymore, their bills also got higher. They found it difficult to bring their kids to college and find a decently paid job, and worst of all, they got drowned in debt. To cut the story short, they’re still on the same ground (not literally of course!), they had been struggling with money and dodging debt collectors for ages. They then had the same wish everybody has, to turn back time.

So, what’s the moral of the story? Practice family planning, just kidding (partly). Most material things are liabilities, things that make you spend more than earn. Such as smartphones, you pay bills to use it, both electricity and data usage. But do you earn from it or even get back what you spend? Well, yes if your business involves a lot of “smartphone usage”. But other than this, it only adds up to your monthly dues.

A business is a great example of an asset.  It obviously brings in something to your bank account. All you need to do is make it grow and keep it flowing. If it’s doing well, don’t stop there and start reaping what you sow and waste them to liabilities. Do the right investments, start another small business without quitting the first one. I know this is easier said than done (believe me, I’m still on the process of practicing what I’m preaching as well). However, this makes more sense and has been evidently observed by most successful business minded people.

A house can either be an asset or a liability. But of course, which do you think is better, putting aside other things to save up for your own house, or paying monthly excruciating bills on something that you don’t legally even own? Try to think of it, an owned house can be an asset by selling it, like a real estate. Huge businessmen do this (but of course, it requires a humongous capital). You can rent for the time being if you’ve got no other choice, but you need to save up to build your own.

Children, are also liabilities, just joking, I’m not going to that topic. (Steve Jobs was once a child too, you know, see, they can be assets as well, LOL). Moreover, if you really love your children, don’t just give them a present. Gadgets and the like don’t really last. Let them whine about the lack of it, but teach them well, provide them what they would really need instead and reward them if you’ve got some extras on the side. Just make sure to secure their future, something that they would be thankful forever (dang, this is me talking earnestly).

     Save more, spend less (sounds like a marketing slogan)

Open up a bank account and start saving a part of the money you earn monthly. You can also act like you are paying yourself or giving yourself a salary directly to your savings. (I’ve been doing this, and I also complain to myself when there’s a delay in payment. LOL) Just avoid the urge of withdrawing what you have deposited (that won’t be sensible, would it?). You can even earn annual interests from saving in a bank, though it’s not much, but at least it’s better than nothing. You should organize by setting aside an emergency fund, a don’t-take-me-out savings account, and a you-can-spend-me till the last drop money.

Also avoid expensive habits, such as drinking alcoholic beverages, smoking, gambling, and the illegal stuff. You will be living a healthy life, and have an obese wallet. You’ll be surprised how much you would save by eliminating such vices.

Prioritize things where you are most likely to spend your money on. It is just like when something is not much of use to you, you don’t give much attention to it or even waste any of your time on it. If something is not that important to you and would only serve you temporary gratification, then better not spend much of your cash on it. Ask yourself questions before buying something, such as, will this item change my life for the better? The questions don’t have to be so deep though, just enough to aid you in making right decisions.

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Earning cash can be very toilsome. Money don’t just grow on trees, they don’t just sprout from the ground either. You have got to work hard to earn much. Having money to put into your savings account takes a lot of time, and sweat, spending it however, would only take seconds. As enticing as it may be, spending what you have worked hard for should be utilized wisely. Know your financial limits and stick to your budget. Material things that are considered liabilities only contributes temporary pleasures, invest your money on things that are really necessary for your lifestyle and useful for you to have. Remember as well that one of the most important rules of money is to spend it to get rich.

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