We all have our own methods to make ends meet and spend money more efficiently, so that at the end of the day (or of the month!) we can afford more things on our wish list. However, there are a few tips and tricks that may give you some extra help on that one; this is why we have prepared for you a checklist of 10 things you should keep in mind while making your financial choices.
Saving is enabling to take care of your future
This applies especially to retirement funds and to those putting money aside for less happier tomorrows, foreseen or not. Just as Antoine de Saint-Exupéry once put it, “As for the future, your task is not to foresee it, but to enable it”; thus you have to be prepared make the most out of whatever comes your way. A savings cushion may allow you to take advantage of opportunities that others didn’t prepare for (think of fruitful investment, for example).
The years to come might be full of surprises, some of which could potentially alter your lifestyle. In these situations, relying on others to cover your personal expenses can become really frustrating, so it is better to prolong your financial independence for as much as you can. It becomes a lot easier to save money when you understand that in fact it’s a favor you do to yourself.
There are just as many spending habits out there as personal wallets
Or bank accounts. Or credit cards. Since our needs differ, it is important to understand that our way of prioritizing them differs, too. Is buying a new wrist-watch more important than paying extra car insurance? One should spend more on clothes or on beauty products? Is it wiser to spend your Christmas bonus on a ski vacation in Switzerland or add it up to your economy fund for the house you plan to buy in two years?
There is no simple answer to that. It really depends on your needs, on your income, and on the pattern of financial education you have been raised with. One thing is clear, though: a vast majority among us can’t afford to reconcile all their present needs with their impulse for self-indulgence and with sustainable plans for the future. Someone who saves money, however, will sort it out way easier.
Having your own savings increases your negotiating power
Many people save their money for down-payments in important purchase, like real estate. It is common knowledge that the larger the down-payment, the more your possibility to negotiate a property, for example, will increase. Moreover, this will bring you the benefit of better interest rates and lower installments, for a shorter reimbursement period.
If you are buying a car, you are definitely aware of how much money you can free up in your budget if you don’t have a car payment each month. Also, you can negotiate the price of the car much lower if you’re ready to pay cash at the dealership. So, if you’re looking for a bigger deal, you’d better start saving!
Saving money can help you have more fun!
If you put 5% to 10% of your income aside for a year you’ll barely notice you’re saving up and may end up finally affording a fun trip around Europe or that Caribbean cruise you secretly long for. But it’s not only about trips – you can make economies for fun large ticket items such as a new bike, scuba diving equipment, a home cinema system or a Play station. Nobody wants to pay off their summer holiday extravaganza in five years, so making a loan for these purposes is not so much of a viable solution. But if you’re saving, you’re saved – and ready to rumble!
It takes a strong will to save money
…And the lower the income, the stronger the will. We all feel good about the prospects of buying a new house, a new car, an exotic holiday, a generous retirement fund, or simply great Christmas presents for our loved ones. Still, the amounts we’re ready to put aside for a purpose are greatly influenced by how badly we want something.
These almost universal needs are some of the most common reasons for saving money – some of us make get to achieve them, some of us don’t; sometimes it is a matter of luck, other times it is a matter of will and determination. Be that as it may, nobody is at ease with saving money for a future purpose that right now feels remote and abstract, while the sacrifices made in order to achieve the object of our desire are very present. For this reason, before beginning to save money for something you have to make sure that the object of your desire is really worth it, so you won’t lose determination on the way.
There is such thing as a saver’s pleasure
Life’s unpredictable and we all know it. There is always a possibility for a sudden job loss, for a number of reasons. Gadgets and cars stop working from time to time, someone close may get in trouble or may get sick, accidents of all sorts may occur (of course, mostly to others) – and all these happen with no notice. Which is unpleasant, because a timely warning would have made you put some money aside and don’t get an extra plasma TV just yesterday.
There are people who save for security and people who should consider starting to do so, because having your own emergency fund brings along psychological comfort and a sense of reassurance. It does feel good to know that, whenever life gives you lemons, you have your back covered – well, at least where money is concerned. It’s a good thing to know that you don’t have to get into debt each time events run ahead of you. And, after all, it’s part of a responsible adult’s life.
Before considering a loan, try readjusting your spendthrift lifestyle
Ok, you’re out of money and you really want that new iMac for Black Friday. What do you do? Before calling your best friend to see if he/she’s got some extra, or before rushing to your credit card, take a moment to see if in the short run there are expenses of your own that can be postponed, if not cancelled. Since borrowed money have to be returned (sometimes with additional charges, if we’re talking about banking institutions), maybe there are some tiny temporary changes that will help you sort it out by yourself.
Reconsidering daily or weekly expenses can help you save money, if you’re really into that iMac. Moreover, you will gain a sense of achievement, knowing that even if sometimes it’s not easy, you’re financially independent and you can handle things on your own. And that, for sure, is a comforting thing to know.
Saving money is not a sign of weakness, but of power
Our society is essentially influenced by aggressive marketing campaigns in its definition of success in terms of material achievement. A recent scientific study in consumer research has proven that in this context, saving money becomes an increasingly daunting challenge. The recently published paper shows some other interesting discoveries: not only self-control and upbringing shape our willingness to save up, but also self-esteem.
People who feel powerful use money-savings more than those who feel vulnerable, as a way to preserve their state of power. However, this is true only as long as the purpose of the savings is linked to the opportunity of maintaining power; when the two dissociate, the effect of power on savings fades away.
If you want to save money, do it on pay day
There is no need for scientific studies to prove it: experience shows that the best time to put a bit of money aside is right after you’ve been paid. Ideally, you should set things up so that you automatically add a little bit each month to your savings, so you don’t have to remember to make the transfer to your savings account each time. What’s even better is that you won’t be tempted to skip a month.
Keep yourself informed about what kinds of savings scheme are made available by your workplace or by your bank. If you agree on a scheme that saves your money straight out of your pay, within a few months you will have built up a solid amount of savings, with the minimum of effort! And your money is always there for you.
Regular savings habit is more important than how much you put away
Regardless of if you have a fixed salary or if your income is fluctuating on a monthly basis, you should set up a minimum amount you can put aside each month, without interfering with your current expenses.
Don’t forget that as your savings build up, they will grow on a speeding pace, even if you are only paying the same regular amount. This is thanks to the fact that each time the interest earned on your money enters your account, it starts earning interest too. This is called “compound interest” and, in the longer run, it can make a big difference in terms of how much your economies are worth.