Good Money Habits for Everyone
Do it the easy way!
All of us are lazy, aren’t we! We want a many great achievements with as little effort as possible and as easy as possible! ‘Simple is Beautiful!” I do simple things that give me the greatest rewards, financially and non-financially ( at least free up more time for myself to enrich myself in other aspects of my life)!
This column will give you an easy solution yet a very practical and highly effective one for everybody to the problem that many of us face in many stages of our primetime – managing your own finances.
Which is easier? Earn a dollar or save a dollar?
Warren Buffet, the second wealthiest person on earth, is guided by this very simple yet very powerful money principle “To save a dollar is to earn a dollar!”
Planning for your own finances begin with savings. Do you save out of your monthly income? Why?
“I need money to pay for emergency purposes like major illness or accidents, to protect from unemployment, pre-mature death; for a comfortable retirement, and of course, to buy that dream house or car”. Sounds very familiar, isn’t it!
Yet, it is the same group of people who often laments,
“I can hardly cover my expenses with my income… only tens of dollars left at the end of the month. Nothing much to save!”
“I save! My saving mainly comes from money I receive from my parents and relatives every year during the New Year festive season. Yah, that’s about all.”
Umpteen times have I heard of such excuses not to save! Listen up! If you don’t have a burning desire to save, it only mean that the things that you want are “WANTS” not “NEEDS”. Think about it…
The sad truth is people don’t make it a habit to save despite knowing that the many things that they want are genuinely “NEEDS” – better education, quality medical and healthcare services, fuel-efficient cars, etc.
Many of us want to be rich and wealthy. Hey there! Are you ready to be the next Warren Buffet!? (“You must be kidding….” I heard that.)
You may laugh your head off what you will see in the next section. However, the person who has the first laugh has the last laugh -- if he does not do the simplest and easiest things in his daily life that will greatly enhance his personal finances. I leave this major life decision to you.
For all those “aspiring” Warren Buffets ONLY
The very least you could do to start saving or to save a little bit more is…
1. Cut down on the “little things” that you spend daily “subconsciously”.
- Do you always have that can of diet Pepsi or coffee from café for your meals?
- Grab a bar of chocolates or a pack of tidbits or a magazine when you queue up to pay for your grocery at supermarkets?
- Take cabs to and fro from work?
- Dine out daily for dinner as “I am too tired to cook after a day of work”?
- Buy an item that is on sale for that day?
List down all the “little things” that you buy daily. Can you do without them? You don’t have to drink coffee for every meal. Make one at your workplace! It is definitely cheaper and you are a few dollars richer per day. If you really need coffee to “perk yourself up”. how about a cup of cheaper coffee elsewhere?
Take the following little exercise seriously.
- Pick out 3 items everyday for a period of 2 weeks that you can save on that will not, in any way, affect your daily routine.
- Record what you spend on and what you could have spend but did not (that is, items that you previously spend on but not now).
- How much you save per day? At the end of the second week?
Congratulations! At the end of the second week, you have a record of your personal expenses. The (unnecessary) expenses have been reduced. You have become richer by the amount saved!
2. “Dropped in and Accumulate” Piggy Bank.
Instead of spending the extra shillings in your wallet, dropped the “heavy” metals into your piggy bank at your workstation or on your study table. A few coins per day accumulates to a big sum.
Banks do charge you for depositing shillings into your account. That’s why some people prefer to ‘drop’ in dollar notes.
Simple? Live and Breathe the Nike spirit – Just Do It!
How much should I save?
This is a valid question. It depends on your financial situation, your financial and non-financial commitments and goals and your own timeline to achieve your goals.
I recommend at least 10% of your monthly salary. Thrust me, this is not a lot. Think about your total expenses per month. I am certain your expenses is more than 10%! If you can save 10% on “little things” per day, you will be able to save 10% a month.
e.g. Daily expenses = $ 50; so one month = $ 1500
Cut down on “unnecessary” expenses = $5; so one month = $150 (Unbelievable! But you can do it!)
Your monthly savings = 10%.
One year = 12 x $ 150 = $ 1800.
You are one step closer to your goals!
Last but not least,
What is that ONE expense that we should not save!?
Pay for quality advice from a professional independent financial adviser to assess your financial situation and how best to meet your personal financial needs and achieve your financial goals within a certain timeframe. This, however, is not the focus of this article.
Having said, knowing what you want and how to achieve them are most crucial. After all, we all want to be financially successful. This can only be achieved if you take that first step – make saving your No. 1 habit!
