Having the wisdom to make the right financial decisions is important. People who spend money as they want without any budget will often find themselves having a lot of financial problems. You must learn to live in modesty within your means and only spend on what you can afford. If possible, you should try to live as cheaply as possible so that you have more money for savings. Everyone has their own financial goal for example to buy a house or a car or a 50” LCD television or your child’s college education.
Regardless if your financial goal is big or small, you must know how to maintain a strict budget otherwise you will find that it is hard for you to save up to the amount that you want. In order to arrive at your goal, you must do some calculations on your expenses and see how much money you have leftover. You should determine yourself how much money you need to spend on your expenses and eliminate away those unnecessary expenses that you don’t need to spend.
To create a budget, you can use an excel sheet to list down the necessary items that you want to buy so that you can easily add up the cost and see how much is the total cost. From there, you can subtract the unnecessary expenses in order to make sure you meet the budget. By tracking your spending, you will be able to cap your spending and avoid spending all your income. Everytime you have leftover from your salary, you should deposit it into your savings account. Most people spend 50% of their salaries on basic necessities such as rental and food which leaves you with another 50% for savings.
Whenever you want to buy something, you must ask yourself whether buying it will affect the other expenses that you already have. For example, if you buy a new gadget, you will not be able to afford paying your room rental. You must find out the true cost of an item. For example, if you want to buy a car, you must not just take into account the cost of the car, but also the petrol cost, and maintenance cost. Doing so allows you to come up with a more accurate estimate on how much you have to spend when you buy the object.
Sometimes, it can be hard to control your spending habit. In this circumstances, you can create a visual reminder for example saving a photo of the things you want to buy on your phone. Whenever you feel that you are giving in into the temptation to buy, you can take a look at the photo so that it can help you to control your urge over spending unnecessary money.