Friday, April 30, 2010

Cut Back and Save

In today's spend all you can mentality the word "save" or "savings" sounds medieval. When we look at the television ads, there are ads that are screaming "buy me now", in the internet shopping is in your fingertips. You can shop 24/7 no holidays and no breaks. What's more it's in the comfort of your own home or office. So the temptation to spend is really great, that is why there are a lot of people going broke these days. So, I have come up with some quick simple cut back solutions so you can start a savings account.

First and foremost let me emphasize that the ultimate solution is "discipline". Without self discipline it is easy to spend all you can and all you have on things that you want but do not need. Also let's define what is a need and what is a want. Want means to desire something greatly or wish for, while a need is a condition or situation where something is required or is a necessity. Now while you may want to have a new pair of Havaianas might not necessarily mean that you need it. But you need food and water and shelter in order to live. Therefore I conclude that needs are necessary in order for us to survive and without it we may not survive or we might get sick for the lack of it. On the other hand you not having the latest pair of Havianas would not affect your chances of survival compared to going without food and water.

Secondly, I want to emphasize to change your mindset about money and buying. Most often than not some people tend to spend on things they do not need or spend cash they do not have just to impress others. Others spend simply because it has become an addiction, once they buy they can't stop. That is why there are several people who lives from paycheck to paycheck simply because they have the wrong mindset. My friend Nora has this problem, she can't afford all those beautiful dresses displayed at the malls but she kept on buying every payday, because she wants to look fabulous and wants to be part of the "it" crowd in the office. The result, after 5 days from payday she is broke and keeps on borrowing money from friends.

Here are some quick cut back tips you can follow:

1. Cut back on Starbucks and eating out. It is more economical to eat at home and cook at home than by eating out. Also, consider how often do you order your coffee from Starbucks? How much does it cost? Add all that up in one month, then one year, see how much money you could have saved just by cutting on Starbucks. If yo cannot stop drinking coffee I suggest you buy the sachet pack and make yourself a cup of coffee in the office, it's more economical.

2. Get a flatmate or roommate. If you are living alone in an apartment or have a big room all to yourself but having a hard time paying every month. Why not consider getting yourself a roommate or a flatmate? This way you can save half the amount that you are paying for your room and you can use this to start a bank account.

3. Stay home for the movies. If you go out every weekend for movies and pizza and beer with friends afterwards, how about going to the movies just twice a month? Calculate how much you spend when you watch movies with friends every month. You would be surprised to see that you have been throwing your money away and giving them to the already rich businessmen.

4. Brown bag it. Instead of buying from the cafeteria at work or eating at the nearest fast food, why not bring your lunch to work? Calculate how much you spend on fastfoods and cafeteria and how much you would save if you bring your own lunch. Perhaps you can bring your own lunch 3 times in a week and enjoy eating at the cafeteria twice in a week.

5. Go PUJ/ PUB. Taxis are a convenient way to commute to work but let's face it they are also a huge cash drain especially when you get stuck in a traffic. Comming early to work and riding the public utility jeepneys or buses can save you loads. Taking a cab should be reserved for special occasions or when it is the only safest way to commute.

6. Wash your own clothes. I know this may sound too much but just remember how much you spend for dry cleaning or having your clothes laundered by the laundry shop. Remember that you want to be financially stable and be able to save up for the rainy days. So why not do the small stuff? Perhaps you can just have your bed linens and curtains laundered but your clothes you can certainly wash it yourself.

7. Pay the bills first. You do not have to be a rocket scientist to do this. Just write down the amount of bills that you need to pay for the month this will give you a clear picture and help you prioritize. So first things first and needs over wants. Pay off bills like rent,electricity,water and gas first. Then food and the rest prioritize.

8. Pay your self first. Get 10 percent of your monthly net salary and deposit it to a savings account. When accumulated the balance would earn interest you can use this for emergencies and I mean real emergencies like medicines etc. not for fashion emergencies.

9. Ebay your old stuff. You can place your old stuff ( but not old like junk and can't be used) on ebay and sell it instead of burying them in your closet or store room. The cash you can earn from the sales could help you buy new clothes or pay off a portion of your bills. You can also do a garage sale.

10. Do not use your credit card often. Treat your credit card as a last minute resort not as an everyday money machine. Many people have been broke because of credit card debt. Also remember to pay off your credit card bill in full when you get it so as not to let the interest accumulate, or if it's heavy you can either pay in half or one third, but do not pay it off in 6 months when you can do so in 3 months. Remember the interest rates are ridiculously high so think carefully. Also do not use your credit card to purchase things that you want but do not need. When you want to buy something that is not an actual need, save up for it, it is better to buy in cash becausethere are no interest rates.

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