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How to Save Money (A Guide to Saving Money and Rational Spending)

Updated on January 2, 2014

Save or Spend?

Every monetary decision you have ever made finally boils down to this simple question. Save the money rather than spending or spend the money rather than saving! Saving will reduce your current consumption and increase your future consumptive. On the other hand Spending will improve your current consumption and reduce your future consumption. So it is ultimately a decision between when you want to be happiest most.

I know we all prefer current consumption over future consumption. Who knows if we will live in another week, right? So consume as much as you can today. But what if you actually did live till next week, next month, a year and 50 years more? Then we will look back and worry about how stupidly we have wasted our resources.

So given a choice, and trust me there is always a choice, we should try a little bit harder to save our money. In fact we should try a little bit more to 'manage' our money. Some for today and more for tomorrow.

The Buddhist Ideology on Managing Wealth...

The Buddha has preached on efficient ways of managing one's wealth so that a perfect balance is obtained in all aspects of their lives. The Buddha has preached us to divide the wealth into four portions. The volume of each portion may vary depending on the personal circumstances at each phases of life, but essentially the wealth must be divided in to four portions no matter how small each portion could be. The four key areas are;

  1. First portion set aside for one's consumption needs.
  2. A second portion is set aside for business (the source of living) needs.
  3. A third portion set aside for use in more wealth generating needs.
  4. The fourth portion set aside for future needs. (savings)

Now these things were preached more than 2500 years ago and the world has changed in a way words cannot describe. So some of these may seem not applicable to today's world. For an example the third and fourth options are essentially the same, but the concepts are still valid.

Money Saving Mentality...

There is no special course for money saving. It comes down to your attitude on life and your lifestyle. This is where 'rationality' is important for a person. A rational consumer is someone who is vigilant about whatever they are consuming, and are always knowledged on their consumption choice and it's utility. Don't worry about the big words, just read on.

Saving money should begin with yourself. There is no use in instructing your parents, kids or relatives to save money if you are spending lavishly in front of them. So you must make habit of questioning yourself on the validity of the specific expenditure you are about to make.

There are certain exceptions to this rule, however. Consider an illness of a family member. All these rules run out of the backdoor in that case, because you cannot put a price to someone's life. After all "Health is Wealth" right? Also education expenditure is something that you cannot really think twice about.

But most of the decisions we make today can be considered as 'exemptional expenses. That means they can be avoided if you really look at them. The question to ask yourself is whether you really need this right now? or can it be postponed for a few more days or months? What will I lose if I don't make this expenditure now? What will be the benefits and costs of making this expense now? This is called being a rational consumer. You must have had analysed all possible options before you make the expenditure. You must be active in finding other possible complementary options if they are low cost with almost the same level of satisfaction.

Money Saving Tips...

If you dig deep enough there are always little corners where you can save up some money.

Online Shopping

Probably one of the best ways to save money would be to shop online. For most online retail businesses they don't have a physical existence other than the website or online market space. It's not that there is 'no' physical existence, but the need to have large warehouses, sales outlets etc to contact the customer. This has a huge influence on the price of the products they sell. That' is why online retail giants like is able to give steep discounts on almost every product. And constantly gives out deals which are even way cheaper than the list price. Keep an eye out for them. (Like this page and stay updated on deals: Best Buy Experience)

Non-brand Products

People, please don't fall for the marketing hypes of all the powerful brands that sell you the exact same generic product with their brand label. It may seem very cool, but in fact you are wasting a huge bunch of money with no added personal benefit. Brand can guarantee you excellent quality and stuff, but there are even better quality stuff if you do a little research.

Limit Using Credit Cards

Credit cards maybe one of the biggest issues in modern money management system. When paying with the credit card you don't feel the real loss of money. You will empowered, that you can buy anything you want and worry later. Yes, exactly-worry later. When you use actual money you feel the real outflow of money and you will somehow be inclined to bargain for a cheaper deal. Always stay conscious.

Save or Invest

Always make the habit of saving up some money. Out of your monthly income put aside in a highest yielding savings account and it will naturally turn up to be a small fortune in a few years. Also you can consider money market savings, where you can lend money on a short term basis and get a high interest back. Or simply invest! Investment in stocks is a great opportunity to also save up money without spending and in the meantime earn a great return. But only get to investing in stocks if you know the area, or else get an investment broker to manage your stocks for you.

Simple Living

Live simple. You don't need luxurious stuff to live your life and nobody will judge you if you do. Make an example out of Warren Buffet, possibly the most humble billionaire. Make an example out of your religious leaders. Gather the essential stuff and distance yourself form the lavish stuff. Be an example for others as well.

There are some great money saving tips on the books I have provided to the right of the hub. If you have time, go through them and change your attitude towards saving money. Because your attitude is everything.


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    • dreamer32 profile image

      dreamer32 23 months ago from Mississippi

      Very good article, those 4 key areas is where money is supposed to go, that's exactly correct because people do a lot of spending in this day and time. I like how you added to invest in stocks because if people would find debt free companies that pay dividends, they can receive a check in the mail or through their brokerage account. Those dividends can really add up.

      As for amazon, I use that site to get discounts when I need something. That's really the only online site that I use. I really don't use any other online shopping. Great article.