I think that this is in part a lecture to myself. It has been an insane year. I am sure I am not the only one feeling the rising cost of goods weighing on them? Also since our first child was born we have loosened up our spending habits mostly where it means that we get to buy convenience and save time. With life becoming more expensive and another kid on the way we definately need to relook our spending habits. The ways I see things, is that I can become negative about the rising cost of living or be proactive about building the life I want.
So often I hear people bemoaning how everyone seems to be richer than them because Sarah is jetting off to France (AGAIN!!), Anika seems to be permanently buying new clothes, Nicole just bought a house and Peter seems to spend ridiculous amounts of money on booze. How do they all afford to do all these things? Perhaps the most valuable financial lesson my parents taught me is that we all spend our money differently. Sarah, Anika, Nicole and Peter don’t all have overseas holidays, their own homes, designer clothes and the ability to buy round after round of pricey booze. Yes, there will always be people who are richer but your relative wealth also largely comes down to how you spend and invest your money. I believe that very few people get rich off of a salary and that most people build their wealth through spending and investing their salary wisely.
Despite what you may think very very few people on this planet can afford to have it all. Even if you interviewed families at some of the most expensive schools in South Africa you would probably find that many of them also have to make smart decisions about how they spend their money. No matter how much you have, it is never limitless. I have heard that most Lotto winners end up poorer than when they won the Lotto. I can believe this. You can’t buy a wealthy lifestyle without the investments to keep it afloat. For example you can’t buy a mansion unless you have the money to pay for the increased expenses associated with a larger property (think increased taxes, rates, higher insurance, security, the list goes one).
So how can you start being more thrifty so that you have money to invest and spend on the things you actually want? Well I’m no expert but these are my tips:
- I recommend tracking all of your expenses for three moneys and grouping your costs to identify where you are currently spending your money. Hubby and I did this once and for a proudly frugal couple there were a few surprises in there.
- Then you need to get real with yourself and admit what costs are essential for your survival and what are not. For example, alcohol is never a need, it is always a want. If finances are tight cut it. Fashion and a varied wardrobe is not a need it is a want. Eating anything beyond the basics you need to nourish your body is not a need. It is a want. You do not need to eat an expensive steak, you want to eat it. You just need to eat something that could give you protein and iron. Mince would suffice for example. Holidays are not a need, they are a want. We found that in one month work lunches and on the go coffees cost us upwards of R500. That adds up to over R6000 in a year. So the question we have to ask ourselves is, is it worth R6000 or would we prefer that holiday in December?
- To keep things simple we make all our monthly purchases on our joint credit card. That way it is easy to keep track of exactly how our money is being spent and when we are reaching our joint limit for the month. It also means that you can accomplish the above two tasks with only an account print out and two highlighters.
I’m aware everyone has different income levels but I do think that these principles are valid across most income groups. As I said, I am no expert but this is what I hold to be true and I thought I would share my little pep talk that I regularly give myself with all of you. 🙂
Please share any awesome saving tips, financial perspectives and insights in the comments below! I am always looking to learn and grow. In the interest of inspiring myself to be disciplined with my finances I am considering sharing my current money saving tips on a more regular basis.