04 Oct Why am I not getting richer?
Well, your spending habits are sabotaging you!
We’ve all been there, get paid today and half way through the month, dololo! Barely any money left in the account. And the circle continues, living from pay check to pay check. This is frustrating right? How can you get out of this circle you ask?
While answers like: get a new job with a better salary, start a business which will hopefully thrive quickly or win the lotto etc. may be the answer for some; this is not answer for most people.
The golden key to getting your finances in order and building wealth is DISCIPLINE! It does not matter whether you earn R10,000 or R100,000 per month. It all boils down to discipline and having a goal for your money.
Here are some tips to help you curb your spending:
- Have an investment/savings goal
As with anything in life, having a goal and achieving it boosts your morale. So with saving and investing, have a clear goal. Know what you are working towards. Start small if you have to, even put it on your vision board. As you get closer to the goal, it excites you and once you reach it, put another goal in front of you.
Think about saving or investing as an investment in yourself.
- Track your spending
If you are not a frugal person by nature, track your spending by budgeting, and I don’t mean a budget that you do once at the beginning of the year and never take a second look at. A budget is only helpful if you regularly go back to it and consolidate your actual spent and the budgeted amount. There will always be a tendency to overspend if there’s no specific plan for the money you earn.
Tip: I know this might sound crazy to some, but if you really want to know where your money is going, do this exercise for a month or two: get yourself a small notepad, call it your “little black book” and in there write down EVERY expenditure; if you buy coffee at the office or you indulge in some unplanned shoe shopping because there’s a ‘sale’….all of it goes into the notepad. By the end of that month, you will know exactly where your money is going.
- Identify your spending triggers
A lot of people take for granted how their emotions affect their spending habits. I for one have been a victim of my emotions at one point or another: if I felt stressed or overwhelmed, I would go shoe shopping!
We tell ourselves little lies that eventually get us in a lot of trouble… “I work hard therefore I deserve this purchase”, while that might be true, equally, you do not deserve anything you cannot afford. Rather save for it than purchase it on credit and end up paying way more than it’s worth.
Ask yourself honest questions: why am I buying this? Do I really need it? Can I live without it? But also remember to budget for some enjoyment as well, as long as it is within your means, there is nothing wrong with it.
- Automate your savings
Automating your money works because you’re paying yourself first: if you set up an active debit order for a certain percentage of your salary to your savings and other investments, you won’t be tempted to spend it later on. As Warren Buffet puts it, “Don’t save what is left after spending; spend what is left after saving.”