The ability to spend less and save more is the cornerstone of accumulating wealth and achieving financial stability in the long run. It is also a foundation for one’s sense of personal security. The reasoning behind spending less and saving more is backed by simple mathematical calculations: In order to retain items that one has acquired through trade or employment, they must conserve them by consuming less than the obtained amount. However, this is often complicated because one is forced to forego personal wants. In some cases, the magnitude of financial needs is usually greater than that of personal income. Fortunately, there is a number of strategies that one can apply in order to increase savings and cut back on spending.
The first and probably the most viable strategy for spending less is preparing a budget (Bangsberg & Deeks, 2010). A budget represents a simple estimate of income and expenditure for a certain period. The skill of budgeting allows one to have a rough idea of what one spends on specific needs. The first step in creating a budget is noting one’s personal income. Once a rough estimate is attained, then one can begin to organize all expenses into a practicable budget. The budget should indicate how the expenses match the level of income in order to limit spending and increase saving (Coleman, 2016). It is important to note down all recurring expenses such as costs of fuel, electricity bills, and car maintenance, as well as miscellaneous costs that are likely to come up in a given period. Budgeting is not only the best strategy for accounting for how much one spends but also for keeping track of one’s financial progress.
Another strategy for achieving less expenditure and more savings is creating an emergency fund (Johnson & Widdows, 1985). Just as emergencies are inevitable in life, they are unavoidable in the world of economics. Financial emergencies can take the form of significant medical expenses, job loss, unexpected repairs or any unexpected event like a storm. The best formula for creating an emergency account is saving enough funds to cover one’s expenses for three to six months. It is advisable for one to take account of all expenses, including variable and fixed expenses, when creating an emergency fund. An emergency fund is one of the best ways of surviving harsh economic times as it allows one to have sufficient time for planning for financial revival.
Lastly, one should identify personal priorities to live within their means (Bangsberg & Deeks, 2010). Apart from the level of income and expenses, goals are another factor that has a significant impact on one’s spending habits. Therefore, it is crucial to single out primary needs from luxuries. In instances where needs encroach on savings, primary needs should be prioritized while luxuries should be overlooked. Long-term needs should also receive precedence compared to short-term goals. Identifying personal priorities can go a long way in giving a clear idea of where one needs to make adjustments in order to spend less and save more.
In conclusion, there is a range of approaches that one can use in order to spend less and save more. Firstly, one can use the skill of budgeting. Budgeting allows one to have a rough idea of what one spends on specific needs. Secondly, one can create an emergency fund. An emergency fund is a good tactic for surviving harsh economic times as it allows one to have sufficient time for planning for financial revival. Finally, one should identify spending priorities in order to live within their means. Spending less and saving more requires one to review personal spending habits in order to apply the necessary modifications.
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