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- Understanding Finance
Are you an impulsive spender? To find out answer the following questions honestly. If not then you’ll never know the truth of the matter.
- Does your significant other complain about your spending habits?
- Does opening a credit card statement cause alarm and worry, and you often discover that you spent more than you thought?
- Do you own more clothes than you could ever possibly wear?
- Are you someone that needs to have every hot new product? If so click this link here.
- Do you often come home with more than you went out to get?
A yes answer to two or more of the above questions would indicate a habitual spending habit called, impulse spending. An impulse spender can put a lot of stress and strain on your pocket book, and bank account. It definitely is never good to spend so recklessly. For one you are indulging in instant gratification, which can cause displeasure with even the coolest of things, and greed, and envy. Maybe you find that material things hold no value or maybe your philosophy on life is, “You can’t take it with you when you go.”
Are you an impulsive spender
Though this is 100% correct, you will end up broke and poor in your golden age. What about retirement? If you don’t set financial goals and you continue to buy impulsively you’ll end up unhappy in the end anyway. So why not be slightly unhappy in the middle while you’re young.
Realistically, money is the root of all evil, but it is the lack of money that is the root. Relationships constantly suffer because of financial woes and burdens. So is that new pair of shoes worth a relationship? In short No, it isn’t. How do you solve an impulsive spending habit?
First, you need to separate what you need from what you want. This can be a challenging event for some people. What is a need, and what is a want? Another hubber answers this question in exquisite detail. Click here to read her informational article.
It is true that advertisers are constantly showing us cool, motivating products to entice us into buying it. You have to give yourself time to think about this product before you buy it. For instance, I’ve known about the Amazon Kindle for a year and a half. Though, I want this item very badly, I don’t have one yet. I have more pressing needs to attend to first.
Credit cards are detrimental to a healthy financial lifestyle in the sense that we don’t immediately see the decrease in funds. Leave those bad boys at home, and when you go shopping use a list and get just what is on that list. If while you’re shopping you see an item you must have, give yourself time to think about exactly how bad you need it. Chances are you don’t really need that item, and if you do then after you’ve considered for a predetermined time period, you’ll have more money and can get the item. After time you will be able to rebuild your financial situation and life will become a better experience for you. Plus you’ll be happier with the purchase because you’ve waited and thought about it for awhile, and you now have longer term gratification.
Five Money Management Tips
Wise Spending will Save You Money
Prices are always rising. Things you buy this week at $1.00 will be $1.08 next week. It is only a little bit but that little bit can add up when you spread it out over a grocery bill. The last grocery bill may be $200.00 well next time, with the same purchases may be $220.00.
What causes these price increases is the world market. The world market directly relates to what prices are going to do. A good example of this is the prices of gasoline. Unfortunately, there is nothing that can be done about this trend.
There is however, a way we can prevent the ever increasing prices from affecting our financial well-being. What does buying in bulk mean to you? To me it means I am getting more stuff for less costs. There is a line to balance with smart shopping though. If there is a store that has milk for $2.50 and eggs for $1.65 a dozen at one place but the store where most of your shopping is done has them for $2.65 and $1.75 respectively what’s the better value? Here’s the kicker though, the stores are ten miles apart and everything else is the same price. Is saving twenty cents on the grocery bill worth the cost of gas to go to two different stores? In smart shopping these variables all need to be accounted for, it’s a mathematical situation. For me, I’d rather go to one store to get my things because I know that I’ll save more on gas money than grocery money.
If you consider how much can be saved by buying canned goods and other non perishables by the case the savings are huge. The best place to get these items is at warehouse stores like Sam’s Club or Costco. All of those items will greatly contribute to a lower overall grocery bill.
Go through your home and make a list of things you can buy in bulk, you will most likely need to clear out some space as well. Getting a membership at one of the warehouse stores can cost some money but is worth the cost in the long run.
The next and final step after a list is compiled is to search and find the best prices for the items you will need throughout the year. Having a year supply of things is valuable so long as you take measures to protect those purchases. Airtight containers for grain like items, and cool dry places for other things.
The Budget – The Ultimate Financial Management Tool
Everybody has a tool box. Sometimes those tool boxes are filled with actual tools, at other times they’re filled with the items we need on a daily basis. A tool box can make us successful; the lack of a tool box can make us fail. One tool we need to have in our tool box for financial success is a budget.
A budget is the most useful thing any one person can have, and is even more important for families to have. A budget will tell you what you have, what you earn, what you spend, and finally how much is left. It is a road map that will guide you in the right direction.
A budget is not hard to create because all you need to put on it is your income and your expenses. Add up both columns for your totals and then subtract the latter from the former. This is the most rudimentary type of budget as it only breaks down a final monthly outcome. Not a lot of people get paid monthly and all bills are not due or paid on the same day of the month.
The type of budget I use is called a bi-monthly or every two weeks budget. I break down every bill I have for each month and separate them by pay periods, usually the 1st and the 15th. From here I take my earnings or income for that time period and subtract the amounts I have to pay. Whatever is left is there for entertainment, which I limit as much as possible, and unexpected.
Let’s face a cold hard truth here, shit happens. Things come up unexpectedly, and when they do, if we’ve managed our money correctly we can handle them. This is the difference between young adults new to the world and older adults that have been around for a spell.
If you’re married it is highly recommended that you build this budget together. When in a life partnership, if you don’t include your partner in these kinds of plans the plan will fail. I cannot do something if I don’t know what it is I’m supposed to do, if that makes sense.
Make sure of two things. First, you are properly planning for the day to day of life. Also, that you are planning for the unexpected because like I said earlier, stuff happens unexpectedly sometimes. Second, you are properly planning for the future. Set goals and determine to achieve those goals. A road map (budget) will make sure you get there.
Without fear of reprisal I say this to you now, when you make your budget, do not make it so tight that you can’t breathe. You should also budget in entertainment and an occasional want. Reward yourself for sticking to the budget and things will start to look up for you.
Let us not forget about a savings plan. This item should always come before anything else. The rule of thumb is generally 10 percent of your net income, it may be gross but I think it is net income. I make four grand a month so I should save, four hundred dollars a month. Saving ten percent will add up quickly too. $400.00 a month is $4800.00 a year. That’s a pretty good chunk of change for Christmas or vacations; put most importantly life’s monkey wrenches.
Do you need help with a budget? There are thousands of forms online that can be downloaded or printed off. Below are some helpful links to these forms.
Why Should I Make a Budget?
I know I discussed in thorough detail what a budget is and why it is necessary but now I’ll explain why it’s so important. Knowing where your money is going is the number one reason a budget is a valued asset. A budget is a written account of where every single penny goes.
If you feel that you don’t need a budget, then I challenge you to account for every single penny, every red cent, for a month. Do this without writing it down. This I believe is impossible unless you have a photographic memory, which only one percent of us do.
It is amazing to see where each cent goes, and how those little things add up so quickly. That daily cup of coffee for $1.45 is $43.50 a month, that’s $529.25 a year. How long does it take you to make that much, some longer than others but it is a new TV or a repair on your house. Coffee can be bought and made at your house for about .05 or .10 cents a cup. That’s $1.50 a month or 18.25 a year, which is a savings of $511.00. Amazing isn’t it?
When you think about how hard you work for your money, and how easily it can disappear, isn’t that motivation enough to start saving. Isn’t that enough to convince you to start using a budget so you can have visibility of your expenditures?
Don’t misunderstand me now; I’m not saying to cut out everything you spend money on. You can still have the same things you do now, just change the way you get them. If you love coffee, or whatever else you can still have coffee just bring it from home. Look again at how much that saves you, and every little bit helps. Someone once said, I think it was Albert Einstein, the definition of insanity is doing the same thing over and over again and expecting different results. If you want things to change financially for you, you have to change your habits and lifestyle, if only slightly.
In conclusion, remember that what you save now can be in a savings account earning interest, that’s when your money works for you instead of you working for your money. Thank you for reading.
© 2010 by Wesley Cox. All rights reserved. Copying without permission is illegal and will be prosecuted.