- Personal Finance
Better Money Management For More Free Time
Why Earning And Buying More Is Not Always The Answer
For many, time is one of the most important elements of their lives but so often we give up this valuable asset and become a slave to money. In western society, we have been socially engineered to think this way. The path to happiness, we are led to believe, is through consistently earning more to buy more. The problem with this is that it becomes an unachievable goal. The goal posts will constantly shift further and further away as we are bombarded with messages that we need to buy the latest this and that, and we must ‘keep up with the Jones’ if we want to feel and be seen to be successful in life.
We are also measured by our careers. Society places a great deal of respect on people who appear to have achieved in their work lives by reaching the top of their profession and being on a large salary. But what have they really achieved, a large income and lots of possessions, but at what price? Long hours in the office, hardly seeing their children growing up, stomach ulcers, a weak heart, burn-out and stress? We tend not to look at the other end of the scale and say ‘look at him or her, look at what they have achieved in life’. But the person who leads a simple life, with no financial worries and finds happiness and enjoyment in a job that many would disregard as not a living to aspire to, can often be the one who has really achieved a better life.
So how can a life, rich in time, not in money, but still financially stable, be possible? How do you manage your money to achieve this?
Managing Your Money
Don’t waste it. So much money can be wasted if we are not careful with it. Most of the time it is much about laziness or fear that stops us getting control of our money and reducing how much of it is wasted. It is not difficult to cut out the waste; it just takes a little time, some will-power, and a willingness to address spending habits. There are many areas where more money is spend than is required. For example, neglecting to check for the best deals on car or house insurance, instead taking the lazy route of accepting the premium your existing insurer has offered. More often than not, the insurer is counting on your being complacent and not shopping around, so won’t offer you the most competitive offer.
Spend less than you have. For some who have found themselves in a financially tight position this may be difficult, but a large percentage of people could reduce there spending by making simple lifestyle changes. It’s not difficult to see if the money being spent is more than the money coming in. Just add up all your expenditures in one month (divide the annual bills by 12 months) and then compare with the amount you bring in. If you are spending more than you are receiving, you need to make changes. Look at ways you can change your patterns of spending to reduce your other out-goings. This may mean cutting back on eating out, taking sandwiches to work rather than buying meals every day, reducing the amount you spend on presents, cutting back on holidays, or taking cheaper ones, or keeping the current car for longer rather than updating it as often as you normally would, and going for a cheaper model. The aim is to move away from debt to the position of actually having money left other each month.
Avoid financial risks. Just when you think you are on top of things financially, something comes along and bites you on the bum. It might be a huge, an unexpected car repair bill, or a medical emergency, requiring costs or meaning lost earnings. Whatever it is, you need to protect yourself as much as possible financially from this taking control of your life. The simplest way to achieve this is to insure yourself properly. Insurance isn’t a luxury; it is an essential part of the budget and will provide peace of mind if the worst should happen. It may be that you take the self insure route, putting enough savings aside to cover you in the event of a financial crisis. Ideally, put three to six months of your usual income aside in an account that is easy access for emergencies but separate from your other accounts so as not tempting you to dip into it unless it is for its intended purpose.
Make your money work for you. Rather than being a slave to money, make it work for you. Make sure you are getting the best savings rates available, or if your mortgage rate is higher than any savings rate you can get, consider paying lump sums off the mortgage instead. If you have credit cards, make sure they are paid off in full each month. By paying the interest you are just adding to the total cost of the items you bought on it. A sale item is not a bargain if you end up paying more for it than you would when it was at full price. The rule for purchasing is simple; if it’s not an essential item and you can’t afford it, don’t buy it.
Learning how to manage your money, and changing your relationship with it and the constant temptations of consumerism and societal pressures, will allow you to achieve a life with more time and more financial freedom.