Tuesday, August 20, 2013
Drops of water make an ocean. Similarly every penny saved is a penny earned adding to your savings. There is no need to explain why we need to have good savings. Just read these tips below that will help you save money that you knowingly or unknowingly ignored.
Don’t ever buy a Credit Card.
The Numero Uno thing that should always be on your Never-to buy List should be Credit Card. One of the biggest mistakes that individuals do is to own a Credit Card. Having a Credit Card is like having a Debt Machine with you. There is absolutely no need for a credit card in your life. Buying a credit card absolutely beats the reason why want to buy it. Let me explain this situation. Say you and you long-time friends decide to have a reunion sometime during month end. Since it is month end you don’t have much money left with you. So while at the restaurant, movie and (the worst) for petrol you decide to use your credit card. Assuming that this bill turns up to nearly a 2000 or 5000 bucks depending on how spend thrift you are. Generally Credit Card Companies usually have a 20-30 day window for pay back. Suppose you used your card on 28th of a month. Then the due date for the bill will be anything near 15 or 20 in the following month. It is usually during this period that you need to pay all other utility (Electricity, TV, and Household) bills too. So you have additional debt of credit card and now for the worse you have to spend half of the month with even less money than you had in the previous month. Now this is where you get into the trap of these companies. So in case you have to purchase something essential you again decide to use your Debt machine. Thus you are entrapped in the credit card cycle of debt.
The worst part of credit card is that you have to pay for it even if you don’t use it. Yes! You heard it correct. You pay for not using a credit card. Even though that Sweet lady on the phone who sold you this debt machine promised that there are no monthly charges for it I bet she didn’t told you that if you don’t spend a stipulated amount in a year you are liable for a fixed charge.
Plan you bills
Now this is a part that no one in this planet is saved from. Paying your bills is as important as breathing for your life. However it is important that you plan on how you are going to pay your bills. There is numerous numbers of bills that an average family has to take care of. Excluding the Essentials like grocery, electricity, apartment maintenance we have other bills that are to be taken care of like Insurance, Tax. A common tendency that is noticed for paying bills is that we pay our bills before the due date. It is absolutely not necessary for paying the bill the very next day. With most of the companies accept e payments you can pay your bills on the last day while you enjoy your banks interest for the same number of days that it is with them. Certain bills are fixed in nature like water and cable, so you can set aside a fixed amount aside every month. For bills that are payable once a quarter or year like tax and insurance make sure that you have planned it. You don’t want to sit wondering how you are going to pay it. For bills that are payable in quarterly or yearly open FD, make short term investments and repay such yearly or quarterly bills.
Don’t be a spend thrift, Stop acting rich!!
Agreed that your neighbour bought a new car. They even change their furniture every year, have new clothes every month. This doesn’t mean that as a social stigma you try competing with them. Stop acting like you are already rich. Don’t be a spend thrift. Before buying anything think whether it is really essential or buying it just because it has been marketed to look like it’s the best thing to buy. Stop impulsive buying. Yes!! You need to put an end to your impulsive buying. What started as way to relax yourself may soon turn into a nightmare if you don’t learn to control yourself. You may be buying unnecessarily just to satisfy yourself. You may want to project yourself as a flamboyant, rich and careless person; all of this with no saving is just going to end you up with a really bad ending. This attitude is just foolish and highway towards bankruptcy. While an occasional outing with family is necessary is essential for adding the spice in life, but make sure it doesn’t cost a bomb and you end up blowing away all saving which was to be used for some other purpose other than this outing.
The proverb “Slow and steady wins the race” doesn’t apply to your finances. In-fact the more early you start the more secure you are. Start saving from Day 1 of your job / business. Tomorrow is day nobody will see today. You never know what tomorrow is going to be so better be prepared for it. You benefit a lot from starting at an early age. Your premiums are low; you may invest less and earn more. Moreover you can pass this habit to your other family members. You can inculcate this good habit to your children from a very young age if you practise it yourself.
If you start very late this is bad not only for you but for your family as well. You may have no emergency fund to support any medical emergency in the family. Looking at the high cost of education today (School, Tuition, Hobby,) forget higher education even basic education may seem to be a difficult task. All of this can be avoided only if you start early. Even small amount have a large impact on your long term savings.
Have a plan and a backup plan.
There is a saying among all the Financial Planners “If you don’t plan you plan to fail.” Planning is very important not only in your financial life but also for your personal plan. If you decide to do save money you to plan how you are going to do it. Whether you are going to have short term or long term plans. Also have a backup plan in case your plan are crashing or seem to be failing at some point of time this your you can prepare for the worst and reap the best.