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Spending habits differ from person to person. Some of us spend extravagantly on clothes and others on gifts. Saving money is the most exciting and rewarding thing to do, but are often entirely overlooked.
By keeping track of where and how you spend your money can assist you to identify your money habits. It can also be the guideline as to which situations to avoid. If your bookkeeping highlights excessive spending when you visit a gift shop or a bar, avoid going there. The coffee machine at work offers free coffee. Maybe it is not really necessary to stop for coffee on your way to work.
It is a good idea to draw money during the week and keep within the budget, and it is advisable to leave all your credit cards at home until you are disciplined. You will soon learn that a healthy bank account can make you much happier than spending your hard-earned money.
Budget and Save
Petty expenses can easily accumulate to a relatively large amount over the month. These expenses include buying a magazine while you have to wait for someone, drinking a quick cup of coffee on your way to work, buying a packet of gum before rushing off to a meeting, buying food at lunch time or enjoying a drink or two at a pub after work.
All of these minor expenses need to be calculated and entered into your budget. Not keeping track of trivial expenses can possibly explain why you could not save.
The Financial Consequences of Debt
Prosperity and economic growth usually reflect the realities of the market. Debt reached record levels. Retail marketing strategies and financial institution’s advertising are psychologically well-researched and applied. It is amazingly easy to fall through the trap of good marketing strategies and then suffer the consequences of debt afterwards.
The onslaughts of advertisements are vigorous, and some of us have fallen into materialism. Borrowing money and swiping credit cards provide temporary excitement and usually leave us with the devastating effect of high interest rates, worries and stress. Smart planning, a proper budget and discipline provide exactly the opposite effect and can allow us to live financially stress free.
Buying a home is exciting and for many a dream come true. Great tips are given on the Websites to every potential buyer who is willing to do a little research before the large step is taken.
Experts in the real estate market can advise you to obtain a pre-approved letter from the lender in order for the seller to see that you are serious about buying a home. The letter indicates the amount that you qualify for and in what price range you can buy into. It does not indicate how much space you really need and which neighborhoods you can afford living in that is less competitive.
Many young couples that bought into the “better” areas ended up competing with high fertilized lawns and advanced security systems. If you buy the biggest house by the lender’s affordability guideline, you will generally not be able to save. A bigger house requires higher taxes, more expensive insurance and more maintenance.
Good advertising and marketing strategies can easily trick us into spending money where there is no need to. Many consumers purchase goods because it is on sale or purchase two items in order to get one free. Money lenders are good at selling more money than what you actually required or applied for.
Money has a price and we usually suffer the consequences of debt afterwards. Interest rates on short-term loans are high. The “pay-advance” lenders (in some countries referred to as “loan sharks”) are even more expensive. Short-term cash loan companies sometimes charge up to 30% interest on a 30 day loan, if not more.
A budget and planning are, first of all, a list of your necessary living expenses. This will include utility bills, groceries, clothing, transport costs et cetera. This is money to cover your living costs. Keep in mind, living costs is not paying credit cards, retail store cards or any other debt.
You should deduct your living expenses from the net amount on your salary advice. The amount that you are left with is called the distributive amount or residual income and is typically the money that you can use to pay debts and with thorough planning, can save a little.
Many of us tend to pay our debts and then, with whatever money is left, try to survive the month. Before we know it, we are back to swiping credit cards, and we suffer the consequences of debt. Our happiness should not be measured by the credit available on credit cards and store cards, but by financial freedom.