Currency is one of the oldest concepts alive, and yet it’s one which still seems to baffle so many of us. We live in such a perplexing economic system that we’re often led wondering how on earth we should be using our money. It’s never quite clear whether it’s smarter to save or spend. There is no definitive answer as to what you should or shouldn’t buy, as people all earn different amounts of money and live different lifestyles. The key thing is to simply live within your means, and there are general ways to interpret that which apply to essentially everybody. If you want to know what you should be doing with your money then here are some ideas.
Make “the budget”.
You probably guessed that this would be the first point, but making a budget is the most essential thing you should be doing with your money. There may be variations in times of what you buy from month to month, but if you follow a rough structure and agree with yourself that you’ll set aside certain chunks of your income for certain expenses then you’ll find you never have to worry about whether you’ll have enough cash left over for important things. Just make a budget today, and you’ll thank yourself later. Set aside everything you need to necessities, first of all. You need to ensure rent, food, utilities, and petrol money are all covered.
Once you’ve covered the important things then you can look at the leftover money: your “disposable income”. You should ideally set aside ten or twenty percent of your overall income for an emergency fund (should some financial disaster ever arise). After that, what you do with the remaining money is up to you. If you know big costs are coming up later in the month then factor that into your budget and rework it at the start of the month. Just plan ahead, and make sure you always know the upper limit as to what you can spend in an average month. Don’t live beyond your means; if you spend less than you earn then you’re doing a good job.
Continuing from the previous point, it’s important to plan when it comes to spending. You don’t have to deny yourself treats or nice things in life, but you should always plan for them if they’re going to take a hefty chunk out of your disposable income. If you stroll into a shop and feel the urge to buy an expensive piece of clothing or some gadget you didn’t previously know you wanted or needed then take a step back from the situation. You should avoid impulse purchases because you end up buying things simply to satisfy that fix; you want to feel that satisfying and elated feeling of swiping your credit card at the register, but you don’t actually want the item itself.
A good way to test yourself in these circumstances is to try out the 30-day rule. If you see something you really want in a shop and you consider that perhaps you actually do want that luxury item then give yourself the test. Wait 30 days, and reconsider the purchase. Set yourself a reminder on your phone. If you see a message pop up to “buy that cute skirt” or “that cool drone” and you wonder what on earth the message is talking about then you know that you probably never wanted that luxury in the first place. You just wanted to experience the joyous feeling of buying it, but the 30-day rule is a great way to break bad shopping habits. Impulse purchases are rarely based on logic, and it’s a good idea to simply head out with a shopping list to which you know you must strictly adhere.
When borrowing money.
Most people need to borrow money at some point in their lives. In itself, owing a debt isn’t a bad thing. In fact, proving that you can pay off money which has been loaned to you is an integral part of building up a positive credit score so that when you need to take out a loan for a big purchase, such as buying a house, you have proof that you’re trustworthy and reliable enough to pay it back on time. Of course, if you’re already in debt and you’ve ended up spiraling quite far down the rabbit hole then it may be trickier for you to deal with the repayment side of things. It’s easy to end up borrowing more money to help fix the problem, but obviously this only exacerbates things.
You might want to start remedying your problem by getting yourself organized and consolidating all your debts into one single payment; you could read about it at DebtConsolidationLoans.com today if you wanted somewhere to begin. Once you’ve got a rough idea of how much you need to be paying back on a monthly basis (or however regular the payments need to be) then you can start looking at your income. As mentioned throughout this article, one thing you should definitely be doing with your money is managing it through a budget. If you owe a debt then this becomes absolutely vital; you might need to cut back on luxuries and pool all your disposable income towards repaying your debt, after you’ve allowed for food and other necessities in the budget. Getting out of debt needs to be your priority, whether you’re paying off a minor debt for a good credit score or a major debt to avoid bankruptcy.
You don’t have to be a wilderness fanatic or someone who fears the end of civilization in order to live a self-sufficient lifestyle. If you simply want to save more money then it’s a great idea to make changes to your lifestyle which make you far less dependent on consumer goods which must be store-bought and far more dependent on your ability to provide for yourself. For example, you could grow your own fruit as talked about at thischattanoogamommysaves.com. You’d save astronomical amounts of money on your weekly grocery shop, for starters. When we talked about whether to spend or save money at the start of this article, this is a good example of a smart way to spend your money; it’s an investment with high returns. You’ll get your own produce and never have to buy fresh fruit or veg from the market again.
Self-sufficiency is a term which can be interpreted in different ways, but you could also make other investments into options such as solar panels if you have the money for it. As a long-term investment, renewable energy doesn’t just help the planet but your back pocket; you’d no longer be dependent on the grid and so your utility bills would hugely drop. There’s always the future possibility of maintenance and repairs, but money is all about weighing up costs; you just need to think about how much you’d save on energy bills and whether that sounds like an investment you’d be happy with at this present moment.
Renting out your assets.
We live in an interesting age. Thanks to the internet, it’s becoming easier and easier to offer all manner of services previously reserved for big businesses. The everyday person can rent out their flat through Airbnb or simply a spare room in their house. If you’re wondering less about what you could be doing with your money and more about what you could be doing with your assets then renting the excess things you don’t use all the time could be a smart way to make some extra money.
You could even use your money to buy a flat and then make a business out of renting it out through sites such as Airbnb. Still, even if you don’t want to spend money to make money, you could do things such as renting out your driveway to people who need a parking space if you live close to the city. You’d be surprised as to what your assets might be worth to others, so the smartest investments might be ones you’ve already made; you don’t always need to spend more money to make money.
Don’t always scrimp to save.
It can be so tempting to chase freebies or cheap deals when you want to save money, but you need to view every purchase through the eyes of the seller. Ask yourself why a store is selling that pair of shoes for such a reduced price. There’s no point saving a tiny amount of money by buying an item of clothing or any sort of product which will then last you half as long as a marginally more expensive version.
It’s better to pay an extra thirty dollars than twenty dollars if that something will last you twice as long. Opt for quality when you’re unsure as to why an item has been reduced in price or you think it should be more expensive given how it appears in the shop window. Sales are a different story, of course; if everything in a store is half price for one day then you might be in with a better chance of getting a good deal.