A financial times article says that a wealth range of at least £2m in the U.K can make one worthy of the title ‘rich.’ The annual Charles Schwab Modern Wealth survey says that a rich person in the USA averagely has $2.3 million to their name. This, according to the company is over 20 times the median net worth of an average household. The report, however, states that for one to be considered financially comfortable, they have to have at least $1.1 million in the bank.
Most of the respondents in the survey noted that they plan to enter the wealthy elite class in a decade, and the easiest way to get there was to learn to ignore FO.MO.
This is often brought on by their friend’s social media posts. From the report it is clear that social covetousness has taken its toll amongst the digitally savvy, leading to overspending, and as your life becomes more and more entwined with social media, you are in increased danger of losing your millionaire set ticket to overspending.
Instagram is taking advantage of this phenomenon and introducing a Checkout feature that allows you to purchase what your heart desires the most from Instagram itself!
Increased avenues for instant gratification are placing many a would-be millionaire in very tight financial spots. Ignoring your friend’s posts on social media might be a tough act to keep up, but budgeting is not.
A budget is a cure for overspending, and with it, anyone can learn to save and accumulate wealth while staying free of debt. Below are some budget ricks that will go along way in helping you saved and utilize your earnings better.
Make up your mind to wait before spending
The number enemy of a budget is the boredom that comes with the territory. Who wants to devote their precious time to painstakingly tracking your spending and plan for every coin your own?
Well, every person that wants to live a happy life. Ask any person living a life of debt, and they will tell you that the vice that led them down the path of slavery to debt is a lack of will power.
If you lack the will power to control your spending habits, then you need to learn to rein that impulse in.
The author of “Get Money: Live the Life You Want, Not Just the Life You Can Afford“, Kristin Wong, says that you can do this by spending at least ten minutes thinking through a purchase before paying for it.
Why do you want to spend your hard-earned cash on that item? Look at its price tag. Is the cost worth its value to you?
If you take up the habit of forcing yourself to wait and consider before paying for any item that you will avoid impulse purchases.
Sometimes you will avoid the payments simply because you do not want to think or are not in a position to. So you will put the purchase on the back burner, till when you have enough time to think it through.
If at all you have to spend cash on an item you have not spent ten minutes thinking about, let the average cost of the item be less than $10.
This habit can be even more helpful in curbing impulse purchases in online shops where all the information required to make a purchase is saved and all you have do is click the buy button.
You can avoid this also by delinking all your credit cards from your browsers, so that with every purchase you have to make, you have type in all the details, which will give you time to contemplate your purchase.
You can also utilize Amazon Contemplate, the chrome browser extension that has a 30-second waiting period before a purchase is made.
Thirty seconds might not seem like much, but in the online environment, they can assist you in moving on to other meaningful activities quickly.
Out of sight out of mind
Most budgets fail like New Year plans do. A plan is made to meet your end goal, but you end up lacking the discipline to see the plan through.
Establishing a budget is a start to financial prosperity, but it is not an end by itself. It an ongoing process that requires to be managed.
One simple trick that helps you keep to your budget is to hide any extra income you have leftover after all the bills have been paid.
You can do this with a simple automated savings bank account. You can also lock up savings in a Certificate of
Deposit, which is a short-term note from a bank, that earns your money interest for a period of 3 months and up to 3 years.
The CD locks in your money and renders it unusable till it matures. Failure to keep it locked will bring on loss on interest or other penalties.
Set an impassable spending limit
There are over 1.9 billion credit card accounts that are considered active in the U.S alone. These accounts belong to 199.8 million people who are the cardholders.
Therefore, it is probable that each household has 10 cards pegged to it. There is currently a high-interest debt pandemic running amok in the world, caused by unsettled plastic money repayments.
In the U.K, for instance, the debt has hit the £72.5bn mark. The average household in that nation has at least £2,688 worth of high-interest debt from the cards.
These sources of debt make it very easy to spend money impulsively. All you need to do is swipe the card. To wean yourself off this poor spending habit, Dave Ramsey, the financial guru behind the Envelope System advises that you should take physical cash and apportion it in envelopes, each to meet a particular need or want.
When one envelope runs out of funds, then spending on that item is off-limits for the month.
This keeps you mindful about your spending, and the use of hard cash is one of the best ways to tackle mindless spending.
In the case of online purchases, use a prepaid debit card and put a spending limit cap too on your credit card. Once the limit is spent, then halt spending till the next month.
This should keep you away from accruing debt or any high-interest loans that are almost impossible to pay or if there is an absolute necessity than take help of any service online that finds good quality lenders for loans that you can pay back easily.
Turn your budget upside down
Do not begin your budgeting process by taking out your expenses first. If you keep doing this and your list of costs grows every other month, then you will have nothing left over to save.
People also fall into the trap of meeting every additional expense that their income will allow.
This can be equated to financial misappropriation of your funds because you could save but are caught up in a spending cycle that can be whittled down to the basics.
You can, therefore, take out at least 10% of your income for savings and meet expenses and debts with the rest.
Try budget bucketing
If you do not have a goal for your money, you will find yourself spending it impulsively. Cash sitting pretty in your checking account can be very tempting. If you want to save more, separate your checking and savings accounts. \
Use budget bucketing to separate your cash kept according to your financial goals. You can, for instance, open a rainy day and a long-term savings account. Have also a checking account for your everyday shopping expenses.
Once the amount in the account is exhausted, then wait till the next month for more. With budget bucketing, you will begin to build a financial plan that will set you on the road to economic prosperity.
Be a bit easy on yourself
All work and no play can make you a dull person, so set apart a little cash for your impulse spending. If you go too hard on yourself, you might fail.
So have some money to purchase those mojitos or that fine dining experience you might want to splurge on. This will help keep your impulse spending habit tethered.
These budget tricks do work, and with a little practice and discipline on your part plus a well-designed budget, you will be well on your way to the millionaire’s club.
jyoti atoliya says
it is very difficult task to manage a budget. source of income and expenditure both should be balance to maintain a budget.
thanks for sharing these post it is very informative.
Luke Dawn says
This really a helpful and informative blog. I never budgeted and not sure if it really works. I’ll at least give it one try as you said.