Money – our lives are linked to possessing and spending money. Having money can make us feel wealthy and successful and its absence can make us feel depressed and poor. Our dreams and plans are intrinsically linked to our cash flow, but our bad money habits continuously thwart the realisation of these plans.
Spending like a royal & saving like a pauper
This is the number one reason why we never seem to be able to get ahead. As soon as the salary is in the bank we go on a spending spree. The money just burns a hole in our pockets as we feel rich, but never seems to last as long as anticipated. Suddenly we find ourselves still in the early days of the new month and now have to make a merge amount of money last for a very long time. By the time next month’s salary is in the bank we are feeling so deprived that we go on another spending spree! Perpetuating the vicious cycle. Needless to say that with this bad money habit there is never any money saved.
Start the month as you would have ended the month by keeping the spending under control and just buying what you absolutely need. Put some money aside for saving and be careful every day with the money that is left. Over time the savings will add up.
Enabling the debt
If we don’t have enough money yet for our own needs then do not create more debt or lend/give money to others. Pay yourself first and make a determined effort to clear your existing debt. When the debt has been paid off, put that money into your savings plan. If you don’t redirect the money into saving immediately after paying off the debt, it will just end up getting absorbed by other expenses.
Put the budget into effect (properly this time)
Drawing up a budget and executing it successfully are worlds apart. It is easy to list expenses and shave off any ‘unnecessary’ spending to make it work on paper but getting it right in practice is a real challenge. Staying on target requires focus and daily deliberate action.
Use the carrot and stick
There is never any real motivation to save if that is where the reason ends. There needs to be a reason and those reasons need to be clear. If you are saving to retire then flesh out how you would like to retire and the amount that gets put aside for retirement begins to feel like you are investing in your future.