My saving habits and how I manage my finances

in money •  5 months ago

The only two ways to have wealth is to save money or to just get wealth from somewhere, which is unlikely to say the least. For many saving might feel like a burden, but there are ways to save money without sacrificing much. Many people vouch for budgeting as the number one way of saving money. For me, budgeting feels like a hassle, but I'll explain what I do instead.

Source: https://commons.wikimedia.org by Zceisab

How do I save money?

I'm lucky when it comes to saving. My parents taught me the value of money and I developed an aversion to spending. I feel bad each time I spend money. Of course some might see this as not being lucky, but when it comes to saving, this is being lucky, because I don't want to spend my money. However, I do buy stuff, expensive stuff even. For me the importance is the balance. No purchase without evaluating need comes easily, except say daily lunch purchases, which I'm used to. The balance I talk about is my thought process, which I exercise each time I buy something. I compare the benefit of buying it, to the loss of money it causes.

Now, you might think this leads to me always buying the cheapest things and living a minimalistic lifestyle, where I never enjoy what money can buy me, you're wrong. I'm the kind of person who buys nice things. I want a big TV, I buy it. I want a nice computer, I buy it. I want a beer, I buy it from the grocery store, not the pub. Now this is the main difference. I don't waste my money on stuff that I can get cheaper. I don't loose $2 dollars there, and $2 dollars there. If I were to loose $2 dollars everyday, it would cost me roughly $730 a year, I can buy that nice TV with that amount of money. The same goes with things like saving $50 on rent per month doesn't seem like a lot per month if the rent is $700 or $650, but when you sum that up. Oh wow, look at that, $600 a year.

How do I spend?

So, I'm not the person who always counts pennies. I don't save to the maximum, that outweighs the benefits in my opinion. But thinking of each purchase I make saves me a hefty sum each year. My one exception is food. I don't care how much I spend on food (well, I don't buy a 15 dollar piece of meat everyday), I buy quality food from the grocery store, again not the restaurant even though I occasionally enjoy that as well and count that into spending, and thats it. If someone is wondering, no I'm not fat. Quality just tends to cost some, but you gotta eat, so why not eat good quality food. For the two of us living in my household the monthly cost is around $500/ month on expensive months (not that expensive).

What about budgeting?

When it comes to budgeting, I only budget if I go out drinking, because alcohol causes judgment to go down so a few drinks in, it might seem like a good idea to buy another, but when I've budgeted before drinking I can cut my costs at my limit, and usually I cut it before that. Again if someone is wondering, my usual budget is around $25 a night that rarely happens (once every two months on average, maybe).

I've never really needed a strict budget, because I automatically save money if possible. I sometimes even decide I'll buy something with this amount of money and end up using 2/3 of it, because I realized that I don't really need to use all that. That is the typical way for me. However, at one point while studying I had to limit using money even further in order not to start using my savings, so what I did was, I just decided I'll use X amount per day. Some days it meant that I used say 1.5 times my daily budget, but the next day I didn't use any. And so on. That is very basic budgeting I've used at some point. I never actually had to keep tabs on my progress, because if I start looking into how much I spend, then I automatically use even less than I usually use. Again, lucky me it comes so easily. But to be honest I don't know why it is hard for other people, but I'm not judging anyone.

Importance of a buffer!

Having a buffer is one of my comforts. A buffer is an amount of money, which I always store in case I need a big sum of money suddenly. It isn't invested, to make it accessible at any time. I also use my buffer for bigger purchases and then refill it back up again if I use it. But I never let my buffer loose more than a third of its price. This is one of the best ways to sleep well at night, I think. It is basically money I don't think of at all, it just is, until I need something and then I consider if I can afford it from my buffer. Usually the process of withdrawing from my buffer takes months, I don't like doing any fast decisions when it comes to big purchases.

How do I decide what to spend on?

Usually there is always a cheaper way to get something. I'm a sucker for comparing prices. I might spend hours saving myself ten dollars comparing prices and searching for the cheapest place I can buy something. Luckily there are a lot of sites, which compare prices for you, but I don't always trust them to give me the best price. Timewise I'm not sure if this is a good habit, but I hate it if I see a cheaper price right after I've purchase something new. So I rather search for the cheapest price. It does save me some money, but seeing as I only purchase things quite seldom it might not be the best use for my time.

Not a typical situation

As you can figure, I might not be the best person to help someone struggling with everyday financial decisions. I'm fairly lucky to having always had a clear understanding of my financial situation. I can't say that I've always had a lot of money, but I've always managed to deal with what I have, without problems. Some of that is of course thanks to early inheritance, which you might call relatives giving you some money they've stored up for you. However, I've never really had to dig into that, it just helps me now that I've started investing. So I consider myself lucky and don't think I am in a typical situation, but I do think I use money extremely responsibly and anyone in my country could do what I do, thanks to the social welfare system.

I also think anyone reading my posts can learn from my way of managing money and investing. It doesn't matter how much you have, growing what you have is always more than you had.

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from you i can learn that making a habbit in wisely using moving is a good things to invest in me, and also my child in the future.

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Glad to be of inspiration :)

As long as you have the time to spend to compare prices I think thats fine.

If your time gets more valuable (you get a busy job and it takes valubale time from the family or you become really successful on steemit and could have written another article) it becomes another story.

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Yeah that is true. It is only a slight contributor however. If doing something else is more valuable then that is of course a better investment. For now that is how I've been living. Part of how I operate.

Nice topic :) I would for future use just use some sub headings to order things easier for the viewers to read.

Instead of the word 'budget', I like to rather use the word 'money management'. Having set percentages of income going to various places sets a good path for the rest of the journey longer term :)

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Thank you for the comment. I'll try to use less sub headings. To be honest, I'm not that much of a fan of them, but people here on steemit seem to use them so I started using them :) Makes skimming the article faster I suppose.

I agree that money management could be a good word also. I don't really do that either. Maybe I will start doing that when I get a more constant income. But probably that will also be something I just do and don't really think about. I tend not to have problems managing my finances, it all seems rather clear to me. Therefore, I'm not the best at explaining how to manage money. Investing on the other hand is something I think I have a simple perspective on which I can explain also :)

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As a matter of fact, I can't quite recall as to why I suggested more sub heading LOL! T|here are plenty. Must've been from all the previous articles I read but didn't say anything about.. Sorry about that!

Yeah, it's always very important to accommodate for you readers. It doesn't help you have great info, but no one wants to read it because it's unattractive :P

True. I suppose a consistent income is required. That's generally a greatly effective method for the average salary-paid person.