Almost every advice you read and hear dictates that saving money is one of the pillars of effective financial management techniques. While it is true and no one can really argue about the importance of savings, still it is one of the most difficult things to do.
This is especially true in the case of salaried people who have to rely from paycheck to paycheck to meet their needs. This post is not really meant for you to totally ignore saving and just go on a spending spree. Rather, it aims to present a more practical approach for people who find it difficult to save money on a regular basis and what should be done instead.
It is difficult to save money so why force it
There is no question that saving money is very difficult especially if there is nothing to save in the first place. You can only save money after covering the fixed expenses that you have on a regular basis like electric, water, utility bills, food, rent, clothing and other similar expenses. Most often, there is nothing more left in the form of disposable income after satisfying all the needed payments and necessary expenses.
It is useless to save money
Well, this is not always the case of course especially if you can regularly save a big chunk of your income and make use of the money in the near future. But if the amount that you can save is so small, you cannot expect it to give you financial freedom later on. If for instance you can only manage to save 200 bucks a month, that’s 2,400 in one year and 24,000 in ten years (interest not computed). Upon reaching the tenth year your saved money already lost a lot of its value because of inflation. It is interesting to read the views of financial experts in this regard and how they view savings as a means to get financial freedom.
What is the purpose of feeling deprived
When you save money, there is the tendency to do away with some or most of the things that you want to buy. While all others have new gizmos, you are in one corner feeling deprived because you could not buy the things that they have like new smartphones, nice dress, branded shoes and the like. You will just feel an outcast and a bit ashamed on why your friends could buy this and that and you could not. Image is everything nowadays and if you want to be taken seriously you have to work on your image and that means investing in yourself even to the point of buying one of those new gizmos.
It is easier to spend wisely
So do not force yourself to save money if you are not in a position to do it. Forcing yourself to save with the resulting effect of deprivation is not advisable as it can only create a psychological impact of you against the world. What you have to do instead is to spend your money wisely. This means you have to maximize the buying potential of your hard-earned money. You will need to become a bargain hunter if needed. Whether it is about food, gizmos, car, rent and other things that you have to own or pay for, you have to maximize the power of every dollar in your pocket.
Look at investments
Investments do not necessarily refer to products offered by banks and financial institutions alone. It can also refer to both tangible and intangible investments for yourself or for your money. Also, it is useless to think of bank investment portfolios if you have very little money to invest in the first place. So the idea of investing in bank instruments is definitely out of the picture. What we are focusing on here is investment in you which is achievable and practical.
When you need to buy things, make sure that you are doing it as an investment that has real potential to bring in more money later on or at least with the potential to return your money without losing its value. It can be a second hand car that you will buy at fully depreciated value. You can later sell it at a higher price or just on break-even price to recover your money.
Investing in your image can lead to job promotion and even business opportunities. This is not possible if you have all your money saved in the bank and nothing left for your image build up.
Instead of saving your money in the bank, why not use it and enroll to get an MBA. Spend for training and courses that can give you more value and marketability in the end. These are just examples of spending your money wisely and there are many others that you can definitely use depending on your circumstances.
It is good to save money and spend wisely at the same time. But if you have to choose between the two, then in most instances it is better to just spend wisely. You can live happily, satisfied, and even stress free.