How to Spend Smart and Save
Our working lives are dominated by the dynamic of exchanging our time and skills for money. That money is then used to pay for rent or mortgage, bills, food, and recreational activities. Sometimes, however, we find ourselves spending money on things that don’t seem necessary. That could be due to an emotional impulse or a gap in our lives.
When we give up our time, our lives effectively to earn money, we want to see some benefit from that. Usually, the benefit is in the form of a product or experience that we feel enhances our life. There is no problem with this, but with a bit savvier and some emotional restraint, you can feel more satisfied with your life and spend less as a result.
There are two types of people in the world, emotional spenders and rational spenders. Rational spenders have everything planned out. They know exactly what they have to spend each day and week and what bills come out of their accounts on what days. This is different from an emotional spender.
Emotional spenders tend to spend on impulse. They might feel a certain way and use spending to feel differently, or they might have an impulse to buy, and that’s all that matters. A healthy spender sits somewhere in between. They practice emotional restraint when they feel that spending pull but also understand the consequences of their spending.
A Tempting Environment
One of the reasons people struggle to break bad habits is because of the environments they live in. Environments can significantly impact the way we think and feel and often affect our spending decisions. Would we be inclined to buy a take away on a Wednesday night if it wasn’t right there on the corner?
If you want to change your spending habits and save more money, it’s worth spending some time thinking about your local environment and where you spend your money. What are your temptations? Is it online or in the real world? And when do you do most of your spending, evenings or weekends?
Emotions and Money
The way you spend money is closely linked to your emotional states. For instance, if you feel very anxious, it affects your thought patterns, making it more difficult to organise your finances and make measured decisions. Conversely, if you feel joyful a lot of the time, there is less need to satisfy cravings with spending.
If you’re having difficulties controlling your spending or saving your money, think about your emotional states. What motivates you to spend? Is it environmental, group orientated, or needs to satisfy something you feel is missing in your life?
The Checking Account
Everyone has a checking account these days. You wouldn’t get very far into her modern world without one. A checking account is a basic bank account that you can open in a branch or online. They are very liquid, meaning you can access your money easily, but they aren’t good for saving.
All banks offer you some interest for keeping your money with them, but in a checking account, that interest is particularly low. It’s not like a tax-free savings account or a Plenti loan that makes your money count. These will return far more long term. Look at your checking account and consider diversifying your money for better rates.
The world is moving more and more towards a cashless society. India, for instance, has stopped 500 and 1000 note currencies, effectively slashing the nations cash holding by 80%. More countries will certainly follow as there is less need for notes and coins in the global society. There are pros and cons to this.
Used wisely, however, there are opportunities for people to make extra savings with a cashless enterprise. Notes and coins are expensive to hold and transport, so many financial institutions pass their savings onto customers in the form of better interest rates. Search for the best cashless savings accounts online.
Long Term Investment
Emotional spenders don’t tend to be effective long term savers. When we follow our emotions and act on impulse, we tend to use the money we didn’t expect. This lack of control translates into fewer savings and fewer investment opportunities. However, there’s no reason why an emotional spender can’t also be an effective saver.
The trick is to understand your spending personality and take steps to balance your financial lifestyle by exercising emotional restraint in the necessary areas. The more you practice emotional restraint with spending, the more resources you will have to invest long term.
Spending and saving are both habits. Depending on your perspective, they can each be either positive or negative ones, but most people regard more financial resources as a net gain. That’s why a saving habit is generally more useful. But how do you change your habits to one’s that are more beneficial?
The secret is to understand your motivations and your emotional personality. People who don’t have life goals, for instance, are less likely to save for the future or invest to accumulate wealth. Also, people with challenging emotions might struggle to control their money. Explore your personality and decide on your life goals.
The Cost of Spending
Spending is a transaction. You exchange money for an item, but there are other costs involved. When you no longer have the money but have an item instead, you give up the chance to accumulate money with interest. This is an added cost of spending your money since objects don’t accumulate interest.
The further costs of spending are the hours you may have to work on your job to afford new things. The more you spend and accumulate, the less time you have to spend with family and friends, in theory. Conversely, the more you save and invest, the more time you should have in your life.
You might think you have a budget worked out, but how effective is it in reality? Most people have a rough idea of their spending and saving, but that doesn’t mean they have an effective time budget that helps to control their spending and prevent unforeseen losses. There are many ways to budget these days. Find a method that works for you.
When most people think of a budget, they think of a spreadsheet and a file of bank statements. This is one way to do it, but it doesn’t suit everyone. These days there are other options. Budgeting apps are beneficial for budgeting. They allow you to link the app to your bank account, so you have live access to spending and saving.
The Need for Less
So much of our financial lives correlate directly with how we feel. Since moods and emotions change quickly and frequently, so too does our spending and saving habits. Also, since we are often unaware of money’s true purpose, it’s easy to lose sight of its value. When all the important life factors are covered, there’s no need to spend money.
Think of your lifestyle. You need a roof over your head and good to eat. You may also need inspiration such as days out and holidays. However, once their bases are covered, there really isn’t any need to spend. Always consider what motivates you to spend and whenever those motivations are wholesome and worthwhile.
Different people have different spending patterns. In the same way, different people have different personalities. Understanding the spending and saving patterns you have and taking steps to modify them can lead to more general fulfilment in your life and more money in your savings account. Life is more pleasant when you don’t have to stress about lifestyle expenses.