Suppose that you won a shopping spree, but could only choose to use the money for grocery items, or use it to shop in your favorite boutiques. Which would you choose? Most of the time, needs win over wants and sometimes when impulse attacks, wants gets the allotted money for needs. Are there ways to balance these two? Here are a few:
Point Out Your Needs and Wants
First thing you need to do is to differentiate two things: needs are those you would normally need daily, weekly, or monthly such as food, clothing, shelter and safety.
Buy at Better Rates
We've all got have financial priorities. But we often stray from those goals and priorities and nowhere does this happen as regularly as in a grocery. Maybe you don’t think your food bill is excessive—even when it is. Can't live without coffee? Go for more affordable ones rather those than ask you to spend a small fortune in coffee beans alone. Don't buy in bulk when you won’t finish off the food anyway. Whatever you managed to save would've just been forfeited because of the food you wasted. So buy only what you need, and if you can, buy them cheaper.
Keep Track of Your Finances
Keeping track of your spending helps you compare your income against your expenses. It often gives you a clear idea of your financial situation, of how much you earn versus how much money you save.
You can start doing this by creating a budget. Categorizing and identifying all costs or payments you make will help you see how you spend and manage your money. Don't throw away receipts, whether from shopping or withdrawing on your ATM. Keeping these paper records can show you where you overspent and should be more careful with in the future.
Still Have Fun While You Save
You're not depriving yourself when you save for the future. While you may need to “tighten your belt” a few times, this really shouldn't get in the way of your fun, not when you know how
Besides, allotting only 20% of your income for your savings is the ideal way to go. You don't have to save to the point that you rely on freebies everywhere: you take free tissues from the toilet or only drink water because it’s free at the office while the coffee isn't. Indulge from time-to-time or when your budget can afford it. Don’t take the things you love away just because you think doing that saves you more money. Financially, it does. Emotionally, it takes out a lot more, and might even make you feel deprived, sad, and even depressed because while you earn enough, you can’t seem to spend on things you like. It’s not going to make you feel very positive about saving in the long run.
If you've never been in the habit of making a budget and sticking to it, you may find it a bit hard to start working on one. However, you don’t have to go pro all at once. Start with a simple grocery list. Then try your hardest to stick to that list, even when you see something you really, really like while you amble through the grocery shelves. Treat it as an exercise in self-control. That pricey chocolate drink might make you happy for a few days but what happens when you run short before payday—just because of one costly purchase?
Getting what you want isn't all that fun, not when you get yourself in debt over it—or when you need to borrow money just to survive till payday. Discipline is the key to successfully managing your money. All the budget tips in the world won’t make a difference if you don’t get your spending habits under control.
Finding the ideal balance between spending for your needs and wants is different for everyone. People have different ideas of what’s important to them, of priorities. For first-time savers or those who want to start being money-wise, following these steps will ensure you get a strong start with your financial goals this year.
About the Guest Author
Ryan Del Villar is a writer at Money Max, Philippines' leading online comparison portal. Ryan is also a freelance writer at Helm Word, an Online Reputation Management company. He worked as an online video editor before he started his writing career.