“He who buys what he does not need steals from himself.” —Swedish Proverb
Because I had nothing else to do, I would waste money.
I used to have a bad habit of spending my money out of boredom, as an impulse. For instance, when I’m on my break at work, I usually want to go outside with the feeling that I need to “accomplish” something. So what I do is I would go to Starbucks and buy a latte that would cost me $4, although free coffee is available in the office break room.
I’d just go about anywhere when outside to buy something— anything! — that would make me feel I have something more than I already have. This is impulse spending. But I realized: This is not a healthy habit at all. Eventually, all these tiny unnecessary expenses would pile up and before I know it, I’m broke or worse, drowning in debt!
So, contrary to my goal of being able to feel that I have something more, in reality I would actually have less because of my careless boredom spending habits.
I thought hard on how I could overcome this bad habit of boredom spending, and, eventually I came up with an idea.
Whenever I would feel the urge to spend again, instead of wasting money on useless or impractical and trivial things, I would just open my phone’s banking app and send whatever amount I would likely spend on anything straight into my savings account.
This way, I am accomplishing something more with my money — and I really do, because I am actually “spending” money on my savings account!
(Recommended Reading – How to Control Your Spending Without Creating a Budget)
I feel so proud of myself for having started this new, healthier habit. I get to “spend”money without really losing it.
Last month, the total amount I accumulated through “boredom” spending on my savings amounted to $150 bucks! That money is what I would have spent carelessly on unnecessary food and items! This time, it’s a great addition to my regular savings.
If you have already placed yourself in debt because of your “boredom spending” (or impulse buying) on useless things, you can reduce your debt. Then, after that, start putting money in your savings account. I highly recommend the debt snowball method.
Here’s why the debt snowball method works amazingly well
This is a strategy for reducing your debt, wherein you pay off your accounts starting with or prioritizing your smallest amount of debt first. At the same time, you are also paying your larger debts but with a payment that is just minimum. For example, you owe someone a hundred bucks. You can pay that debt in staggered amounts, and at the same time, you also start shaving off your credit card debt by paying the minimum amount every month.
Once you are able to pay off your smallest debt, you can proceed to the next slightly bigger one, until the only debt you have to pay is the largest one.
This debt snowball method is a form of debt repayment strategy that is most often used to repay revolving credit (e.g. credit cards) effectively. As you are able to repay each small debt in full, the monthly money you are using to pay that debt is then used toward making paying off your next largest debt with just a small addition to the amount, so you get to pay all your succeeding debts without feeling too overwhelmed.
If you have a friend who is having money problems, be a better friend to someone in debt and encourage him or her to try this method. Make sure to be with them at every step of the way because methods like these won’t be easy but trust me — it’s going to be worth it.
Now that you have successfully paid off all your debt, it’s time to save (more) money.
“Nothing helps you sleep better at night than knowing you have money tucked away for an emergency.” —Greg McBride, CFA
How to save more money from your hard-earned income and other sources
SB has a very goo resource page that talks about ways to save money. I think you can start through the list, you’ll surely find items that you can pretty much save money on. Here are the three important points to remember.
1) Stick to a strict budget and maintain discipline with yourself. Set a specific amount you will put into your savings account regularly, or set a target amount of savings you want to be able to store each month to your savings account. Again, this requires diligence and a great deal of self-control.
Managing personal finance is nothing but training your thoughts and developing a saving mentality. If you find the urge to spend, spend it instead on your savings account. Remember this rule: savings first before bills/needs and then wants.
Remember budget will fail, even you’ll find your budget failing consistently. Do not be disheartened. Strive to narrow the gap next month. Your aim should be to focus on your saving target, and gradually moving towards the target, slowly but steadily.
2) Choose the right type of savings account. You might want to consider registering for a bank account that requires a predetermined period of waiting before you can actually withdraw money. A prime time deposit account is a great example. You can also have a special savings account for lump sum cash awards (like annual bonuses)with a high interest rate which will give you more rewards the more money you pour into it.
Keep in mind though that putting aside money in a saving account is actually not a good strategy in the long term for the abysmally low interest rate. Once you have sufficient amount, you should think about other investment options. But that’s the topic for another day.
To learn more about the best ways you can invest $10,000 for your future, visit Traderushreview.us.com/10000k
3) Automate your savings. Another technique for more disciplined saving is to arrange a debit order that will help ensure that adding money to your savings account happens every single month. Doing this will prevent you from spending money unnecessarily — and help you save money at the same time.
In fact, there are plenty of banks that do this, and governments all over the world are encouraging their citizens to automate their savings.
4) Use a tool. Identifying items to save money on, counting savings, keeping track of saving goals, maintaining budget, measuring your investment return, are all time consuming tasks. Good news, there are plenty of free personal finance apps that can easily do this job for you. Most of us use Personal Capital, there are other options such as Mint, Betterment, Wealthfront and FutureAdvisor.
Without a tool managing your finances will be extremely difficult and time-consuming process.
My retirement race begins NOW
I don’t want to simply retire comfortably with my money on my back as I age; I also want to make the most out of my retirement. Having more than enough money for retirement will help me enjoy the best things life has yet to offer. I can now “boredom spend” not just on savings or investments, but I can also spend money on just about anything that will make me happy. So let’s all start saving now regularly!