5 Tips On How To Spend Less And Save More Towards Financial Security

9/28/2020

The secret to financial security is not to have more money, but having more control over the money we presently have.

First, for virtually everyone, financial security means being able to meet life’s expenses, which often include:

Buying a home.
The tuition fee for your children.
Meeting the adversities that life may deal with you, such as sudden loss of job and disability or a simple flat tire.
More important, being able to retire comfortably without ever having to worry about running out of money.
Many more...

Second, we cannot rely on others to provide sufficient resources to achieve financial security. We must accumulate some investments on our own. Accepting that you are solely responsible for your financial success is the first critical step.

Third, the only sure way to get money for your investment is for you to create an excess of income and save regularly.

Fourth, to create that excess (positive) cash flow and to save regularly is to spend less than you earn. How? You need to live simply, avoid impulse buying, and create a budget.

Fifth, there is no secret to spending less than you earn – it’s just a matter of living beneath your means and not “within.” Again, your income should be greater than your lifestyle cost for you to create that “excess.”

Financial security is not so much dependent on how much you earn, as it is on how much you spend. Many rich people spend more than they earn; many people of very modest means spend a lot less than they earn. Some people may have the same income as you, the same number of mouths to feed, and the same rent or mortgage to pay, but they are probably spending a lot less than you are.

The common problem of those people who got bigger income tends to upscale their expenses which is what we call “lifestyle inflation.” Do not fall for that trap! If you manage to increase your income, do not increase your expenses yet, take that opportunity to invest more or create money machines.

We all know how important it is to spend less so that we can save more, but far too few of us do a good job at it. Our society worships the good life and consumerism. Most people can’t let our friends, neighbors, or co-workers beat us in the game of acquiring “things”(never-ending). If we don’t have them, we are made to feel that we have failed. As the famous quote says, “We buy things we don't need with money we don't have to impress people we don't like.”

We need to do a better job if we want to achieve financial security. Once you set your mind to it, cutting expenses can be easy. Here are more tips on how to develop your cost-cutting plan:

Set a target for how much you would like to cut your expenses. Above all, be reasonable. Don’t be so ambitious at first that you have no chance of achieving your spending reduction target. You might end up so discouraged that you’ll go back to your old spending ways. Whatever your situation, indicate the amount you would like to reduce your monthly spending. Note down a specific amount or figure. One way is to list down and classify your expenses to non-negotiable expenses (food, water, electricity) and negotiable expenses (cable, cellphone load, etc.). Check if you can cut some negotiable expenses which are expenditures that we can live without.
If you have difficulty saving anything, start small. Prove to yourself that you can do it. When you get a new raise or higher income, add the amount of money you net from your raise to your savings. Bear in mind that it does not necessarily mean that the more income you get, the more spending you’ll do.
Pay your loans as soon as possible. Avoid too much debt that will put tremendous pressure on your family’s finances. It is like a toxin in your body. Do anything to flush it out. Identify many cost-efficient strategies that can help you survive these financially tough times.
Be more consistent and determined in saving. You may have saved a little over the years, but you need to do better. Instead of doing it sporadically, make it a regular monthly habit of yours. Ideally, you should be saving 15 to 20 percent of your income. If you are middle-aged or older and don’t have money set aside for retirement, 20 percent or more may be necessary if you want to retire comfortably. Rule of 20-20, 20 years before, and 20% of your income.
Once you have developed your plan, stick to it. You’ll soon find that you can afford a future without giving up the good life. It is priceless.