Wise Spending
Money
Matters
(Subscriber Access Only)
What do I mean by wise spending? I mean getting more of what
you really need and want - more of what is actually good for
you. Even a little bit of money can be very powerful if used
properly. With that in mind I'm reprinting below an excerpt from
my Money
Saving Secrets.
<<<<<>>>>>
Part One: Seven Keys to Spending Less and Still Getting What
You Want
Key # 1 - Discover What You Really Want
Perhaps nothing causes us to waste more money than not knowing
what we want. How many unused exercise machines are sitting in
basements around the world? How many people have get-rich-quick
courses still in their wrappers? Which of us wouldn't love to
return all the unused or under-used things we have had in our
lives for full retail and have that money right now?
It goes beyond just not buying what we don't use. Have you
ever bought a more expensive alternative when you would have
been just as happy with the cheaper one? If it's truly worth
it, buy the expensive thing, but at least ask the question. If
I can't tell the difference between a $10 wine and a $100 wine,
why should I ever buy the latter?
This principle is especially important with large purchases.
A new car may be just what you need, but be sure. Buying a used
car and using the rest of the money for a trip around the world,
or a small investment in stocks, would make some people happier.
You may be one of them.
Peoples lives are full of expenses that don't necessarily
make them healthier, happier, or better in any way. There's is
nothing wrong with expensive boats, for example, but there is
something wrong with a boat payment for a boat that isn't used,
isn't there? You have to discover what you really need and want
- and will use.
Which sounds better to you: having a life full of new cars,
expensive furniture, and expensive homes, or retiring ten years
earlier? There is no right answer except whichever is right for
you. But why do we so rarely ask questions like these? These
are the kinds of options we have whether we know it or not. Why
not know it?
A Money-Saving Exercise
List everything that you have spent money on, are currently
spending money on, or might spend money on. Don't just read this
and think of a few things. Take the time to actually write it
all down. Review your bank statements if you have to, in order
to remember and include everything.
If this is tough, try tracking your every expenditure for
the next 30 days instead. Include every candy bar, newspaper,
mortgage payment - everything. If you are married, you'll have
to both help with this part of the exercise.
Now go through the list, and carefully consider each item.
Take the most time on the big items - past, present and future.
Suppose your timeshare on the beach is worth half what you paid,
costs $1,000 per year in expenses, and is rarely used. You need
to learn from that, not to punish yourself, but to have a richer
life.
You see, saving money isn't about sacrifice. We all are aware
of the scrooges in life that pinch their pennies, bank the savings,
and then do nothing with it. What's the point? On the other hand,
when you save money in one area of life, you will have it to
use in another area, so your whole life can be richer.
For example, what if you notice that you're spending $13 per
month on subscriptions to magazines you don't read, or insurance
for a motorcycle you almost never ride? Cancel the subscriptions
or sell the motorcycle, and what have you lost? Is it a big deal?
What will that $13 get you instead? Think about it. I'll get
you started:
- Bank it for ten years, and with interest you'll have over
$2000. You could use it to take a second honeymoon, or buy a
used car for your college-bound son or daughter.
- $156 per year savings could pay for a day off work once
a year, to spend with the kids.
- Invest it well and you might have an extra $60 per month
during your retirement years.
- Buy six or seven good books a year, to learn something new.
- Make banana splits for the family once a month.
- Give $156 per year to a worthy cause.
$13 per month can do a lot if used wisely. Imagine what you
could do if you stopped wasting $200 per month. That's why it
is so important to discover what you really want - and what you
don't want.
<<<<<>>>>>
This is just a part of wise spending, of course. Even when
you know what you need to buy there is a right time and a right
way to buy many things. After all, if you can spend half as much
on anything, the other half is there to be used for other goals
- and no sacrifice was required. I'll have more to say about
wise spending in future issues.
|
