Zdzisław Dudek Good and Bad Spender

How to be a good spender?

How to become a consciousconsciousconscious spender and live safer financially? Saving does not at all have to mean giving up the comforts of life or entertainment. By following a few simple steps, you may create better spending habits, feel safer, and achieve your bigger financial goals faster.

Step 1

Create an emergency fundemergency fundemergency fund to cover unexpected costs. You will avoid costly interest chargesinterest charges [interest charge]interest charges if things go wrong and get extra money for a great summer holiday (for example) in the future. The rule of thumbrule of thumb (idiom)rule of thumb is to save 10% of your income every month. Why 10%? Because it sounds manageablemanageablemanageable and is unlikely to interfere withinterfere with somethinginterfere with your basic needs.

Step 2

Create a plan for how to spend your money and note down how you spend each month. In other words, create your own budget. It sounds technical and difficult, but in fact it is very simple:

- determine your monthly budget;

- collect all the documents recording your fixed costsfixed costfixed costs;

- determine all necessary variable expensesvariable expenses [variable expense]variable expenses, such as the cost of food, transportation, or entertainment;

- add all your other regular contributionscontributions [contribution]contributions, i.e. costs of education, subscriptions, etc.

- think again about your spending habits, perhaps you forgot to include “casualcasualcasual” snacks or treatstreats [treat]treats you accidently buy regularly. Their prices usually escape our attention.

Step 3

Now look again at the figures: is your budget sensiblesensiblesensible or are you often short of moneyyou are often short of money [be short of money], idiomare you often short of money? Are your calculations realistic or does your new budget need readjustmentreadjustmentreadjustment? There is nothing wrong with modifying it after some time. Perhaps it will become a tool you use to discover some unnecessary spending you usually do not notice? Especially, if you reflectreflectreflect on a number of budgets month by month. It can be a revelationrevelationrevelation.

Whatever the benefits of budgetingbudgetingbudgeting may be, there is one important thing: always think about the prize that goes with better monitoringmonitoringmonitoring of your finances. You should always have a goal, whatever its size (it can be a holiday or a new laptop)! Think ahead and enjoy the thought! It is really important.

There’s just one more issue: can anything be done to avoid being a bad spender?

How to be a bad spender?

Step 1

We all sometimes spend money without a plan. The problem starts when we spend money without reflection (step 2 shows you one tool to increase your awarenessawarenessawareness). Things that you should definitely try to avoid are:

- going shopping on an impulseon an impulseon an impulse, especially when you decide to buy something without comparing prices (why not use on‑line tools first?). The best policypolicypolicy is always giving yourself time to think things overthink things over [think something over]think things over before you commitcommit (yourself)commit. Perhaps the best time to buy this thing is next month or a different season?

- doing shopping without a shopping list. A good list will help you not only to remember what you need to buy, but also to avoid things you do not really need (some people buy things not because they need them, but because they are bored!).

- buying things just to impressimpress peopleimpress others, reflect: will this product really make me happier or be disposed ofdisposed ofdisposed of after a short time? And in the case of a more expensive item: does it really match my style, interests, or hobby?

- getting caught by the tricks of advertisers who try to make you reach for brand‑name productsbrand‑name productbrand‑name products without even thinking. At least try genericgeneric brandgeneric or store brandsstore brandstore brands, starting with the products you buy most often. You may be surprised how much money you may save.

- buying convenience foodconvenience foodconvenience food or snacks “out of habit” (just think: wouldn’t a home‑made lunch or sandwich be cheaper and, most  of all, healthier?)

Step 2

Reflect on your budget (or better yet: a series of budgets) and find items which were actually a waste of money. Those which have dragged you away from your dream goal or prize. Aren’t they a product of a bad habit which you have developed over time and is difficult to get rid of? Think about what you are going to lose by sticking to it.sticking to it (sticking to something)sticking to it.

Step 3

Breaking bad habitsbreaking bad habitsBreaking bad habits and being aware of your spending habits will definitely produce some savings. TracktrackTrack them with pride and watch them grow. This pride will motivate you to keep goingkeep goingkeep going when temptationtemptationtemptation strikes.

Conclusion

Keeping in mind these simple steps above will definitely make you feel better and much safer. Adopting healthier ways of managing your money will, in the end, bring greater financial freedom and peace of mindpeace of mindpeace of mind.

1 Źródło: Zdzisław Dudek, licencja: CC BY-SA 3.0.