(Newswire.net — December 13, 2019) — It is vital to learn why earning income, save first spend next works. It is a rule only financial savvy people follow. With this principle, one can hit any financial target they set. Money is a trendy topic, yet the hardest to understand. Many have tried different ways of trying to achieve their financial goals to no avail. It is such an unfortunate majority of them do not follow the rules of the game. When it comes to money, the only way to discipline yourself is by setting standards. Without strict rules, it is almost impossible to get there. So, how does this strategy work?
Financial rut
We all wake up every morning to go to work. The goal is to earn money, which in turn, we may use to spend on what we love. It may be that trip to Dubai or the purchase of the latest motor car in the showroom. Before we earn this money, a lot goes into our heads. We think of all the good things we could, and we would do.
Finally, it’s end month, and you smile all the way to the bank. It is a pay day! You’ve made income, and from then onwards, it is your decision that will make the difference in your life.
From this point onwards, you will be surprised how needs become endless. The more you spend, the more you want. After a week or two, you are left wondering where the money went to. You start the cycle all over again, wishing and hoping for end month to come for you to receive another pay.
Well, this is what is referred to as a financial rut. A state of financial complexity where you cannot make sound financial decisions because of the vicious state of affairs you’ve put yourself in. The question is, for how long you will keep living like that?
Here’s the solution: earn, save first, then spend! Is it doable? Yes, it is! Try this.
Proper Accounting
Record keeping is not just an institutional thing, it should also be your way of managing your finances. You may invest in accounting software. There are many of them available online.
So, this is the trick. Any income that comes in should first be recorded. Do not leave out even a cent. Once that is done, go ahead and make a budget.
You definitely know what you need. Not want, but need. Only necessities and essentials. Basics like food, shelter, and clothing. Perhaps you have extra needs like education and transportation costs. Include all the bills you need to pay.
Compare the totals and income. Remember to be realistic. Include all the needs and do not leave out any income.
Now, many people have budgets. The only problem is when it comes to implementation. Ensure you submit yourself to your plans.
Saving Vs. Spending
Spending is the easiest way to poverty. You need to understand one thing. Everyone in the world has a share of the existing resources. Whenever one becomes rich, the money does not come from the skies. When he/she gains a million, someone somewhere has lost a million.
Your loss is somebody else’s gain. Getting rich is about taking it away from others. Different people use different methods to take away from others. The fairest way to take money from others is by doing business.
So, always remember that whenever you are spending, you are helping others make money. By so doing, you are impoverishing yourself. The only sad news is that spending is inevitable.
That is why saving is essential. Saving simplify put is spending on yourself. The more you save, the more it is perceived you are investing in yourself.
The big question is, which one comes first?
Do I spend then save, or save then spend?
By now, you already know the answer. Saving should come first. You are as rich as your savings account balance. Therefore, the more you save, the richer you are making yourself.
On the other hand, people who save after spending only end up in trouble. Sometimes there’s nothing left to be saved.
You cannot survive without spending. The only thing you need to establish is discipline and set the right priorities. Cutting spending may involve going for cheaper purchases, including low-interest loan rates.
Decision making
As much as it is important to instill discipline in your financial spending, do not deny yourself the chance to live a comfortable life. You may harm yourself even further.
To avoid making irrational decisions, plan well even before any income sets in. Use percentages to decide how much will go to the savings account and what will be spent.
For instance, you may choose to allocate 20% to savings, 50% to expenses, and 30% to investments. Adjust the figures according to need and change of circumstances.
Saving first before spending will not allow you to get into the temptation of living outside your means. It will also keep you focused and serve as a reminder you are chasing a certain goal.
The Bottom Line
Above all, saving before spending can only be a reality if discipline is in play. Even borrowing requires discipline too, make sure you borrow then pay it back from a reliable lender, you may go to this website and find out more. Otherwise, it will remain to be a dream that will never come true. This mantra works well with proper planning and strategy. You may use percentages to make it easy to adjust the amounts according to circumstances. As your income increases and expenses reduce, so does your savings amount as it is a percentage of the former. That is a more realistic approach than using exact figures.
Saving is merely spending on yourself. It is for your own good and a way to increase your net worth. With time, you will find yourself achieving your financial goals with ease. It is disastrous to save after spending because needs are unlimited. Therefore, to avoid fixing yourself, you should save then spend the money left. It is the best way to grow.