There is a saying, that to be rich one must become more frugal, an expression proven by the fact that regardless of income level, people who tend to live within their means and save slowly whilst living modestly are more likely to be on the right path to real wealth.
Often though, the opposite is the norm as many people spend more than they actually earn, while continuing to rely on credit until their next pay date – often times using this credit to pay off other debts – causing even bigger financial problems.
With July being National Savings Month, 1Life provides some guidance to help simplify your life, to help you save more money by providing a few small tips for lifestyle changes and choices.
- Cancel the unnecessary: Although many payments are non-negotiable, (including things such as utilities, insurance, rent and transport) some are actually negotiable and unnecessary. You can cancel things like multi-media subscriptions, un-used gym memberships, weekly fast food binges or expensive cell phone contracts.
- Make saving happen automatically: Instead of worrying that you keep forgetting to save, set up a debit order on payday. Doing this forces you to live on less than what you earn, which is required if you truly want to get ahead and stay ahead.
- Shop online: Rather than being bombarded by sales and other distractions at the mall, try shopping online, which will allow you to keep track of exactly how much you have spent, and forgo any unnecessary spending.
- Insure adequately: Invest the time upfront to understand your insurance, even if it is just the basics of your policies and how they work. Health, life, dread disease, disability, home and vehicle insurance will make sure that if the unexpected happens, you will have the peace of mind knowing that you and your family will be taken care of.
- Focus on one financial goal at a time: Many of us seem to always be juggling debt, savings and everyday living expenses, some might be needing to put down a deposit on a car, others simply want to pay off debt. Instead of juggling all these, try focusing on one goal at a time. For example, if you need to pay off R6 000 in credit card debt, allocate all your disposable income toward debt repayment for now. Stick with this method and you’ll pay off the card faster, at which time you can move to the next goal on your list. If you have more than one debt to pay off, work out what the lowest amount is you can pay off on all of them, then take the money saved and allocate it to the debt with the highest interest.
- Resist the pressure to impress: Wealth doesn’t mean fast fancy cars, the newest phones or the biggest houses. True wealth comes from only acquiring what you need and what you feel will improve your life and that of your family – rather than “buying things you don't need, with money you don't have, to impress people you don't like”.
- Get practical in the choices you make. Understanding what your or your family want to achieve and decide what is practical in your spending decision. For example, is buying a new car necessary now that the family has grown - or is it just to get the latest car to keep up with the Jones’s?
Living simply doesn’t mean you have to deprive yourself of good things - it just means that your idea of good things may need to change. It also means giving yourself the freedom to choose a freedom that comes from implementing simple changes that can rid you of unnecessary debt and spending.