In this world full of unpredictability, there is no substitute in the feeling of security. It is reassuring to know that you are prepared for unexpected challenges that may come your way. While we do not want to think about them, problems such as illness, accidents, or even unemployment can occur at any time.
This is why preparing financially is important— it makes you extra-capable in dealing with many unexpected turns in life. Besides, even if these problems do not arise, having savings will make you a lot more secure for your future. Therefore, here are some simple ways on how you can prepare and be a smart spender.
For a lot of people, savings only comes after they have bought their needs and wants. This is not a good practice. Instead, you should follow this budget hierarchy: (1st ) needs, (2nd) savings, (3rd) wants. Needs refers to commodities (such as groceries), utilities (such as electricity and water) and/or loans.
When you get your monthly paycheck, immediately allocate funds for these, no questions asked. Make sure that you pay your bills monthly without skipping. Next, savings must always come before wants. Make sure that you allocate a definite amount.
For example, you may allocate 10% of your salary as savings. Deposit it in your bank (preferably in a passbook account) so that you cannot readily spend it. If you put your wants first and they happen to be expensive, you will end up with no savings. While your wants may spark joy, they will not spark security. If you really want to buy something, save for it in advance. Remember: having savings is not optional, it is necessary.
Go easy on your credit card
Having a credit card is so easy to use, especially when you do not have cash on hand. In fact, it can be so easy that it may tempt you to spend more than you should. This is why you should only use it when you really need it.
You may use it, for example, if you are injured and are rushed to the hospital. You should not use it when you see a pair of shoes that you really like on sale. Again, if you really want something, you will save for it.
Take advantage of promos
There are products that we will certainly need for life. Examples of these would be commodities such as toothpaste, shampoo, soap, etc. When there are promos and sales of non-perishable commodities like these, it is good to take advantage and buy in bulk because they have long expiry dates and will surely not go to waste as you use them daily.
Do not deprive yourself
While savings are important, you should also use your hard-earned money to enjoy yourself. If travel is important for you, then allocate some money for it little by little every month. You can plan a number of vacations, but make sure that you have saved up for it without touching your life savings. While saving for the future is smart, living in the now is also important. After all, you only live once.