Being thrifty is not just about not spending; it is more a case of being careful about not wasting money. To get your savings in good shape, you must get into the right mindset.
You should view your savings not merely as a goal to achieve but as a means to achieving something much more than money. Having this approach will help you see the value of things rather than just the price. Here are a few tips to get you into the right money mindset.
Consider Money As The Means To An End
Reframing money from being the goal to being the means to an end will allow you to make better decisions. For instance, if you merely desire money for money’s sake, you might go out and buy a flashy car as soon as you have enough money. However, it is unlikely to be the best car for you. Much better to decide on the vehicle you want then get the money to buy it.
Reversing your thinking about money this way gives you much more freedom and improves your savings. An excellent tool to avoid impulse purchases and help you save is to adopt the 30-day rule.
The 30-Day Rule
This rule is straightforward to implement; wait thirty days from thinking about buying something to making the purchase. This time will allow you to evaluate whether you need the thing or not. Chances are, once the thirty-day period has passed, you are unlikely to want the item still if your desire for it was based on an impulse.
Pay Yourself Before Anyone Else
If you pay everyone before yourself, it’s unlikely that you’ll have anything left to save. Set up an automatic payment into a savings account as soon as your wages go into your bank account. Doing this means you’ll have no opportunity to spend that money on other things. Ensure you set up a similar system for getting your bills paid too.
Be Wary of Lifestyle Inflation
If you get a pay increase, be wary of inflating your lifestyle based on that rise in income. If you increase your spending along with your pay increase, you’ll be no better off. No matter how great the temptations, keep your spending at the same level, and you can save the additional income you’ll have leftover.
Invest In Experiences Rather Than Things
Investing in experiences can be much more life-enriching than merely buying things.
Set Clear Goals
Don’t merely dream of having something; set a clear goal of what you want and when you want it. Doing this will set you out on the pathway towards achieving it. It will also help you maintain focus on the savings you need to make to get there.
Learn More About Money and Finances
There is a seemingly infinite amount of resources available online to improve your knowledge and understanding of money and finances. Also, learn from those who have become financially successful. Mixing with such people can help get you into a money mindset.
Develop Multiple Income Streams
When it comes to income, don’t rely on a single source. The economic situation can change quickly, drastically, and without warning. Having multiple sources of income will protect you should one or two disappear.
Understand the Difference Between Assets and Liabilities
Understanding this difference can help you stay out of debt. Liabilities take money from you (mortgage, car loan, etc.), whereas assets generate money for you (investments, cash, property, etc.).
Shop Pre-Owned or Second-Hand
Avoid falling into the trap of needing the latest fashion or devices. Very often, pre-owned items are just as good as new ones, and you’ll pick them up at a fraction of the price.
Make Being Debt-Free Your Priority
Paying interest on your debts is like throwing away money. Once you get free of debt, you can start saving all that money you were paying in interest. Start by paying off loans with the highest interest rates. Doing it in this order means you’ll soon have more money to clear the remainder.
Don’t Be Overly Loyal
Unfortunately, when it comes to utilities and service providers, loyalty doesn’t appear to be rewarded. New customers seem to get the best deals, so try switching your providers each year and make significant savings on energy, phone, broadband, and other services.
Build Up An Emergency Fund
Having an emergency fund is critical to provide you with some security. You should aim to have enough in your fund to sustain you for three to six months. In the event of you losing your job or some other catastrophe, you’ll have enough to see you by until you can get back on your feet.
Reframe Your Ideas About Success
It would be best if you did not view success as having lots of material possessions. Health, happiness, and quality of life are much more valuable and rewarding aspects of life.
Hopefully, adopting these money-saving habits into your life will boost your savings and help give you a more rewarding life.