Saving instead of Splurging - You CAN Do It

Extra Cash? Woohoo!

I have seen it happen time after time. A good friend runs into some money - maybe a bonus at work, a good new client for a freelancer, or maybe even a small lottery winning. Their response is to start looking at ways to gift themselves. "Oh, great, I can get that fancy haircut!", or "Finally, I can get that hot pair of shoes!", or maybe "Great timing! There's a special in the stores on the complete set of all seasons of Desperate Housewives!", or "It's time I indulge myself and my wife/husband with a nice evening out".

I confess: I used to be the same... Until I met my prudent better half.

It was a long process, but he finally made me change my outlook on personal finance. Until then, I figured money in my hand was money I could spend. He taught me that well kept secret:

The money you save now will be worth much more in the future.

Save now, and you will be able to get a whole lot more from your hard earned dollar. And after all, isn't that what we all want? That is why you should always make saving a priority - it comes before anything else right after your most basic necessities.

Not spending your money today, doesn't mean you deprive yourself from things you love. It means the same money will give your even more of those things down the road. You don't have to live a frugal lifestyle forever, but if you save up for several years, you will be able to maintain a better standard of living, managed on a solid and stable ground, for the rest of your life.

It's true too. Thanks to my husband, we are finally at that point, where our money is actually making more money for us. I never have to worry about paying the bills on time. Sudden expenses are not an issue either. No, we're not very rich, and we don't even have a monthly paycheck to rely on, as both my husband and I are freelancers.

What's our secret? We save, and have saved enough along the years not to be worried about our daily, weekly or monthly expenses.

Why Money Saved Gets You More

Money makes money. If you invest it wisely, it can generate quite a bit of interest. It's important to carefully choose your investments, and choose the right kind for you, depending not only on annual interest rates. Probably the most important factor is your financial stability and your prediction on how long before you may abruptly need a large sum of money out of your savings. In our case, for example, we save for the long term, leaving enough money in short-term savings to allow us to replace our car, as we know we will have to do sometime in the coming year.

Unpredictable expenses are actually one of the most important reasons to be saving money. You see, money costs money, so you want to avoid loans as much as you can. Your own savings are therefore also important serving as your own financial safety net. It's always best to take money out of your own stash, rather than take a loan from the bank, and pay for that for years to come - if you can even get a loan, that is.

If you make a point of saving a nice chunk of your money every week or month, and put it into a savings account, it won't take long before you find yourself in relative financial comfort. You may not be a millionaire, but you also won't have to worry about money anymore.

Here are some tips that may help you get on the way to saving towards your own financial liberation:

Make Saving a Priority

Prepare your own financial plan to dealing with expenses throughout the week, month and year. When doing that, add saving to the list of expenses, and put it up high on the list. Saving comes before any luxury on your list - always. Be harsh with what you define as a luxury. Sweat the small stuff on this one, including books, going to the movies, calls on your cell phone, new clothes. If you didn't have the money for it, would you be able to survive without it? If your answer is yes, then put money into savings first.

Never live above your Means

This goes back to making a financial plan. Understand your financial abilities and your limits and simply live within your means, humble as they may be, while keeping saving a priority! For my family, this meant we lost the cables, cut down on cell phones, switched to a cheaper car and gave up traveling out of the country. I remember my mom asking with surprise, "but you can surely afford that?" Well, I had to tell her that we couldn't because that money went into our savings instead. Just because we were making the money at the time, didn't mean we could afford to spend it.

Start a savings account

Savings accounts are easy to set up. Their advantage is simple: they encourage you to deposit money into the account, but make withdrawing more difficult: You can't just write a check like you would with your checking account. What's more, savings accounts usually offer you a good interest rate on your money, so your money keeps working for you. It's better than keeping money under your mattress, and these days, it's a good way to start saving without worrying about riskier investment channels.