Spend less money than you make
Spending less money then you make seems like a simple and strait forward task but many families find it hard to do. Many families live paycheck to paycheck. Many people buy things they don’t need but want. Instead of spending money on essentials, people find themselves spending on their wants causing them to live beyond their means.
Here are some practical tips to help you spend less than you make:
- Make a budget
- Make your purchases with cash—it takes more thought and pondering to pay with cash; it will cause you to determine whether you should spend your money on this or something else more important.
- Have a weekly spending allowance
- Control emotional spending
Avoid credit card debt
A big problem some people have is getting in credit card debt. They dig themselves into a big hole and struggle to dig themselves out. It is very easy to just put something on a credit card and expect to pay it later. When using a credit card it is typically best to pay it off right away unless it has a no interest period. If you carry a credit card balance, you’ll likely have interest to pay; which can add up to hundreds of dollars a year.
- If you carry a credit card balance—look for a card that offers zero interest and transfer your balance to that card and pay it off. When the time has expired, if you haven’t paid the credit card balance off —look for another zero balance card and transfer the remaining balance.
Saving money is a great idea for many reasons. You may need it for emergencies, may need it after you retire, or you may save for your children’s college tuition. It is a good idea to put about 10% of your pay away each time you get paid. That way you’ll have money for the unexpected and emergencies. There are many obstacles life can throw at you like loss of your job or unexpected bills. Saving money will give you a little piece of mind in these situations.
- Have money automatically withdrawn from your paycheck into a savings account before you ever touch it. And only touch it in case of an emergency. If you think you can’t afford it; start small—start with $20 a pay, $10 a pay and keeping adding to the amount that you save each pay.
- When you get a raise, automatically save the raise, you’ve been living without it, continue to live without it.
Spend money on things that make money
To increase your wealth and be comfortable financially it is a good idea to invest in stocks, bonds, etc, buy rentals or invest in something that pays you money back. Many people spend their extra money on items that over time depreciates in value, a car is a prime example. But investing your money in something that makes money will allow you to eventually get your money back then start profiting.