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Money Concerns In Your 30s: Managing Your Financial Goals And Investments

young family smilingWhen you get older, your money concerns will change according to how you develop in life. In most cases, it gets more complicated as we get older. In a previous post, we have discussed the financial issues that people in their 20s have to go through. Now, let us focus on the next decade – your 30s.

An article published on Forbes.com revealed how most of your decisions during this decade will have serious implications in your 50s. The latter is the time when retirement is a little more than a decade away. We all know that money concerns in retirement is vital. If you want to keep yourself from feeling too stressed during the years leading to your retirement, you may want to consider the decisions that you will make in your 30s.

As you enter your 30s, you will realize that planning for major financial decisions will be quite prominent in this decade. They are not similar to what you encountered in your 20s. In most cases, your decisions will not only affect yourself, but also the family that you have started or will soon be starting with your significant other.

What financial changes happen in your 30s?

The money concerns that you will have in your 30s are closely linked to the changes that will happen in your life. To better discuss them, let us define the 3 financial changes that typically happen when you reach this decade.

  • Getting married and having kids. While these are primarily emotional decisions, these are also life milestones that should consider your personal finances. You need to make sure that you are compatible financially with the person you are marrying. If one of you is secretly bringing debt into the marriage, that can cause problems. Having kids is also a huge financial decisions. Childbirth and childcare cost a lot of money and you need to be financially prepared for it to be a responsible parent. These are the life changes that will affect the money concerns in your 30s.

  • Establishing a stable career. Another area in your life that can affect your finances is your career. When you are in your 30s, the chances of you having a stable career is quite high. This is also the time when you can go through a tough job mishap and still bounce back. You are relatively young so building a stable career for yourself is very important in your 30s. The time of testing the waters should be left in your 20s. Make a choice and stick to it so you can start working on your future more consistently.

  • Making big investments. Lastly, reaching your 30s mean you are starting to make big investments. If you are about to get married or you are just married, you will be thinking about a permanent home. That is a big purchase that you need to be prepared for. If you have a stable career, these investments can happen in your 30s.

Do not think that decisions about your money should be done lightly. Approach these changes with care because there are seemingly simple financial decisions that can change your life significantly.

The financial plight of the Gen Xers and Millennials

At present, Americans in their 30s are shared by two generations: the youngest of Generation X and the eldest of the Millennials.

In some way, society and the current economical conditions will define how you will deal with the money concerns that you will encounter in your life. It can also shape how you will make financial decisions. Given that, let us take a look at the money habits that these two generations have and how it can affect their respective financial situations.

Generation X

Gen Xers who are still in their thirties are the youngest of this generation. They are the ones born between the early 1960’s and early 1980’s. This is the Post World War 2 generation so you can expect that they grew up in better conditions than their parents. According to the data found on Wikipedia.org this generation are financial risk takers. They have the entrepreneurial spirit that gave rise to a lot of small and medium businesses in the United States. Although this generation made less than what their parents did when they were the same age (especially the men), they have the confidence that their parents did not have. The decline in earning for men is also attributed to the fact that women have strongly entered the workforce to become second (or even primary) earners for the family.

Millennials

On the other hand, the oldest of the Millennials who just entered the workforce had to deal with an economic collapse. This made them a bit more timid compared to their predecessors. The page on Millennials from Wikipedia.org mentioned that this generation is also called the Peter Pan or boomerang generation. Their lack of confidence in their financial situation results in the delay in a lot of life events. This includes moving out of their parents, getting married, etc. What they experienced during the 2007-2008 economic collapse contributed to this drastic change. This is beginning to be a concern because the financial decisions of Millennials can set a trend for the younger members of their generation. It has to be dealt with so it will not stunt the growth of t recovering economy.

Regardless of the generation that you belong to, it can be expected that your 30s play an important role in the kind of life that you will live in the future. The difference in approach of the two generations paint extremes when it comes to dealing with money concerns. The Gen X are risk takers and that can make them more confident about taking on too much debt. Millennials perch on the other side of the scale for their timid nature when it comes to investing. Both have to ease up on the overconfidence and the lack of it. That is how they can maximize the opportunities that will come their way in their 30s.

Tips to make wise decisions regarding your financial issues

Making wise decisions when it comes to your money concerns is easier said than done. That is true. However, you should not be afraid to make them at all. You can make mistakes but why dwell on that possibility. While they can be great learning experiences, you should try to avoid them. Here are some of our suggestions when you are trying to make financial decisions.

  • Remove your fear of debt. According to a recent study by PewSocialTrends.org, Millennials are the first generation to really have high levels of debt. A lot of them had to deal with poverty and unemployment. This makes them timid when it comes to debt. While there are debts that can destroy you, there are those that can help. You need to educate yourself about the debts that has the potential to do you good. Once you do, it should be easy for you to remove your doubts and fears about debt.

  • Monitor your financial situation. You will feel more at ease with your money concerns if you can stay on top of it. That is why monitoring your personal finances through a budget is the best way to avoid mistakes. When you know what goes on with your money, any new concern can be dealt with accordingly.

  • Know what you want for the future. Your 30s may seem like a long time before you retire. But do not be fooled by the 30 year gap. A lot can happen in between and if you haven’t started yet, you need to seriously consider your retirement plans. You can contribute a small amount to your retirement fund and still have enough to live a comfortable life. Although it will not be as low as when you started in your 20s, it is definitely smaller than when you decide to start in our 40s or 50s.

  • Set up goals. Having financial goals is a great way for you to give your financial decisions some direction. As soon as you have identified what you want for your future, try to build your financial goals around that.

  • Do not delay your savings. If you reached your 30s without an emergency fund and you are not in a financial crisis, you have been very lucky. Do not test your luck any further by building up your emergency fund right now. You should also start saving for investments like the down payment of your home. Saving can literally save your life so make sure you have this financial safety net in place.

  • Protect yourself and your family. Insurances have their uses and for someone who has a family relying on them, this is a necessity. You want to make sure that any incident will not leave you or your family crippled.

All of these money concerns in your 30s can be a way for you to secure your future. If you deal with them correctly, you should be able to manage your goals and investments well. That should paint a bright financial future for yourself.

What Motivates You To Grow Your Household Wealth?

smiling womanWe’ve all been driven to grow our household wealth. It seems like from the beginning of our existence, we were raised to prepare for this task. We are sent to school to increase our skills so we can earn enough cash to grow our personal wealth. We buy our own home to increase our net worth. We all work 9-5 every day for 5-6 days a week just so we can earn the money that will help us spend for all our needs.

Modern society is built in such a way that we cannot survive without money. It’s a cliche that finances are given so much importance in our lives but even the most un-materialistic person will have to agree that you cannot live without money. We have corrupted too much of our natural resources that most of us cannot be sustained by what mother nature can provide. It all has to be improved and commercialized to fit all of our needs and that requires money.

The US household wealth in 2013

Thankfully, the US household wealth is continually improving to meet all our purchasing demands. In the most latest release of the Federal Reserve.gov, the total wealth of all the households and nonprofit organizations have steadily increased for the past 7 quarters. The release last December 9, 2013 showed the following:

  • Q1, 2012: $80.85 trillion, net worth of $67.32 trillion

  • Q2, 2012: $80.92 trillion, net worth of $67.38 trillion

  • Q3, 2012: $83.08 trillion, net worth of $69.60 trillion

  • Q4, 2012: $84.52 trillion, net worth of $70.92 trillion

  • Q1, 2013: $87.51 trillion, net worth of $73.97 trillion

  • Q2, 2013: $88.90 trillion, net worth of $75.33 trillion

  • Q3, 2013: $90.93 trillion, net worth of $77.25 trillion

There hasn’t been a decline since 2008 and this shows that we are making good progress. Although the consumer credit is also increasing, we have learned how to control it enough to keep it from ruining our household wealth.

But even as the improvements are there, the quest to increase one’s net worth is still evident. We still go to work, aspire for a higher paying job and so much more. But what exactly drives us to grow our household wealth?

Growing your personal net worth is the same as just about everyone else. However, we are all driven by different motivators. Before we discuss them, let us understand why this is important.

The most important source of our wealth is our job or business. This is something that we do everyday. If you really want to grow your household wealth, you need to make sure that you are productive enough to earn as much profit as your limited time can produce. This means you need to choose the right job that will give you the satisfaction that you need.

StatisticBrain.com shows that although money is an important factor, people value the feeling of accomplishment more than a higher income. In fact, based on the study from the University of California Berkeley last April 2012, 48.8% prioritize the sense of accomplishment. Only 21.3% look at a high income as the priority.

5 ways you are motivated to increase your personal net worth

Identifying what will motivate you the most to earn money will help encourage you to overcome any obstacle that will come your way. Work is not easy and motivation will help you plow through all the difficulties.

Given that thought, let us define the 5 different money motivators that can increase your chances of growing your household wealth.

  • Need to survive. The most important yet surprisingly not the most common is the need to survive. As we explained earlier, you need to have the money to meet your daily needs. That is just how society is built. We used to trade products but since not everyone has access to natural resources, we are given a symbolic trading tool that we now call money. If you want to eat, you need money – even if it is to provide the materials you need to cook. If you want to clothe yourself, you need to purchase that and that requires cash.

  • Need to improve your status symbol. The most popular motivator that is oftentimes unnecessary is to improve your status. We strive to increase our household wealth because we want to be at par with the beautiful homes of our neighbors. We want to be able to turn heads when we drive past pedestrians in our luxury cars. We want to be able to send our kids to good schools. This is caused by the consumerist mentality that we grew up in and although it is not as important as the need to survive, it is still a strong motivator for most of us.

  • Need to improve our quality of life. This is almost similar to the previous but it is more focus on what you perceive you and your family wants. Improving your status is something that depends on the people outside of your home. The difference is, the need to improve the quality of your life depends on what will make the people inside you home happy. For instance, you want to earn more to help your family afford a bigger house because the kids are getting bigger or there is another one on the way. It is not because everyone in the neighborhood are expanding their homes.

  • Need to be financially stable. Another motivator that people have to earn more money is to be financially stable. THis is probably the wisest of all the money motivators. If you had been through a bad crisis in the past, you want to make sure that you set up your future right to be financially stable. Some people simply want to have less monetary stress so they can enjoy their lives. This can only be done by improving your savings and making sure that you have the money stashed away before a crisis strikes.

  • Need to have fun. This is probably the most aspired yet unrealistic for a lot of us. It is a rare feat for anyone to have a career or financial decision that is motivated by fun. Most of the time, it is motivated by practical reasons. But some people have the personality that can only be motivated by their need to have fun. This feels more uplifting than the others but it may not always be the most rewarding.

Identifying your motivation to grow your household wealth will help you understand the instinct decisions that you make. With this comprehension, you are able to set up your financial opportunities to suit your personality best. The reason why you want to boost your motivation is because your happiness and sense of fulfillment will push you to go through boundaries you never thought of surpassing.

It may or may not be a good thing but society wants us to keep on improving our household wealth – even beyond what we really need. It may be excessive but you can actually use that to set up your life right. It is always okay to build up your wealth but make sure that you do it for the right reasons. Otherwise, you might end up pushing yourself towards a path that you cannot live up to. That can end up failing.

Co-Signing Loans: How To Be Smart About It

two men talking on coinsThere are a lot of financial decisions that can change your life. No matter how simple they may seem, you could find yourself facing a lot of problems in the future if you make the wrong move. This is what got a lot of us in debt in the present. We made a lot of bad choices that led to our failure in managing our money.

Of the many decisions that you should be careful with, cosigning a loan is right up the top of the list. While we all want to help our family and friends, co-signing loans is not one of the best ways to do it. That act can lead to a lot of negative things – even if you think that the borrower is a very responsible person.

Are you really helping others by guaranteeing their loan?

Co-signing is defined by Wikipedia.org as something that involves promising to pay the debt of another person in case they are unable to do so. It is not the same as counter-signing wherein you merely act on behalf of another. The full responsibility still falls on the person being represented.

When you cosign a loan, that means you are accepting full responsibility for that debt. You are equally liable in case the lender or creditor is not paid on time. Your credit score will also suffer if the person you cosigned for ends up being irresponsible.

Truth is, it is hard to say no to someone close to you when they ask you to cosign their loan. We have that natural sense of wanting to help our loved ones – especially our children and elderly parents. We think that a few simple strokes of your pen is all it takes to help them out of a financial fix. But before you can continue with that trail of thought, you have to ask yourself: are you really helping them? Sure you are helping them get the finances to pursue their goals but is co-signing loans really the answer to the problem?

Here are some thoughts that you need to ponder on.

  • You are giving them the easy way out. Instead of saving up for a certain expense or working hard for it, you are putting name and credibility on the line. You are giving them the easy solution – something that may or may not cost you.

  • You are not increasing the value of their financial achievement. There is nothing more valuable than working hard to achieve something. If you help your loved one by co-signing for them, you are removing the value of their financial goal. They could lose the sense of wanting to take care of something just because they got it without much effort.

  • You are teaching them to rely on others instead of their own abilities. By agreeing to help them with their loan, you are teaching the main borrower to just rely on others to get financial help. They will not think about taking care of their credit history and their personal finances because you can bail them out if they ask for help.

In the end, you know that you are not really helping the borrower with their financial difficulties if you agree to do this for them. Think this over and do not be afraid to say no if you do not feel comfortable with it.

How being a guarantor for someone else can ruin your finances

If you ever co-signed for a loan and you are now in trouble, any financial expert will just look at you with that “I told you so” expression. Most financial experts will tell you flat out to never co-sign a loan for someone else because you are risking more than your finances. You are also putting your relationship on the line. Suze Orman is one the financial advisors who discourage this practice passionately. Here is a video compilation of her thoughts about co-signing loans.

While this is a big no-no, there are instances wherein you are compelled to help someone with their financial problems. For instance, if your child wants to go to college and neither of you saved up for it, you may be required to co-sign for that student loan. If your elder parents are asking for help, this may be something that you can help them with.

But before you agree to co-signing loans, here are a couple of things that you must do first.

  • Choose the people whom you will co-sign for. Even if it is your parent or your child, if you know that they are irresponsible with money, then just say no. You are saving both of your relationships this way – even if you will earn the ire of the one asking for help.

  • Find out why they cannot get the loan themselves. If it is because they have a bad credit history that involves a lot of payment defaults, then do you really want to help them out?

  • Look for alternatives. Maybe the one asking for help can save up for the purchase? Or maybe they can sell some of their assets to get the funds that they need? Instead of helping them with the loan, why not help them get the means to acquire the money that they need? This may be a better option for everyone.

  • Protect yourself before signing. Make sure you review the documents for the loan and you come up with your own agreement with the main borrower. For instance, if you are helping them to finance a business, ask to own a part of that business until your name is cleared from the loan. Only then will you relinquish the rights to whatever collateral they will put on the line. If it is a home or a car, get the title of the car and a signed document that says you get to make decision about that asset. You can decide to sell the asset or tell the lender to sell it in case the borrower fails to make payments.

Only agree to co-sign if you have the money to risk for that particular loan. If not, then just say no.

3 Simple Financial Decisions That Can Change Your Life

woman looking at documentsPersonal finance is such a complex subject simply because there are so many financial concepts that you must know. Each of the concepts are not really difficult to understand but they can be a challenge to implement. Knowing and implementing the right money-related ideas in your life will help you make the right financial decisions that will lead to the growth of your personal wealth.

This is the reason why a lot of financial experts and organizations put so much importance in financial education. You cannot hope to control and make good decisions about your money if you do not have an idea how to manage it in the first place. It is just like how you treat car ownership. If you want to own a vehicle, you should learn how to drive, the rules on the road, and the proper maintenance practices that will keep your car in good condition. Failing to do this can lead to all sorts of problems: car accidents, trouble with the law or even spending too much money on car repairs.

Given that, we’d like to discuss 3 simple yet very important financial decisions that has the power to improve or destroy your life.

Should you live within your means or live below your means?

The first financial decision that you should consider is how you will spend your income. We all have varying incomes but you should not be fooled into thinking that people with bigger salaries are always better off. Sometimes, those with 6 figure incomes have more debt because they do not know how to manage their money. In other cases, those will smaller monthly compensations are living debt free lives and can afford to spend money on their entertainment activities.

The reason why people are miserable with their finances is because they failed to live within their means. This simply refers to having your total monthly expenses lower than your total net income. Here are some of the reasons why this decision can change your life.

While living within your means is important, you should consider if you should live below your means instead. The difference is, the latter will give you more savings than the other.We will discuss this in detail later on but the bottom line is, you may want to go even lower than your means so that you have room for emergency expenses.

  • Keeps you from incurring debt.

  • Forces you to make better spending decisions that will shape a more progressive decision making skill.

  • Encourages you to monitor and track where your money goes.

  • Prompts you to use a budget plan.

The secret to be successful in living below your means is actually budgeting. There are many templates that you can use – like the one that you can download from the National Debt Relief site. We have a free budget planner worksheet that will help you get started on your budget. Not only that you can also use a budget calculator that will help you determine how much you should be spending based on your income. There are many programs online and we suggest that you use the budget calculator of MappingYourFuture.org – a non profit organization that helps consumers, especially students, to pao out their financial future.

Probably the best thing about your budget is it will help you with all the financial decisions that you have to make. It will tell you if you can afford to buy a particular product or if you have the funds for an entertainment expense.

To save or not to save?

Another important financial decision that you will make is whether you will save or not. There are many reasons why you need to save and here are some of them:

  • Prepares you for any unexpected expense.

  • Keeps you from compromising your usual expenses and payments in case an emergency situation requires immediate funding.

  • Allows you to set up and reach your financial goals (e.g. buying a house, car, etc)

  • Gives you a feeling of security, knowing that you can finance any unexpected expense in the future.

  • Eliminates the need to borrow money.

  • Protects your future self from financial hardships.

  • Provides you with the finances to celebrate major milestones in your life.

There are other reasons why savings is important but these are the most popular. These reasons encourage people to save for their retirement, buying a home, marriage, parenthood, education and other important events in their lives. While the list can be long, you can prioritize what you will save on. For instance, the important ones include your emergency fund and your retirement. Once you have built up a sufficient amount on your emergency fund, you can start saving up to buy a home. Don’t be discouraged if you can only put in a small amount in your savings. The important thing is to start doing it.

Your savings account will incur interest while an amount remains there. The bigger the amount, the more interest will be added to it. While the interest rate is small, it is still free additional money. Find out how your savings will grow by using the Bankrate savings calculator. There is also a retirement calculator from Money.CNN.com that can help you determine how much money you need to save so you can live a comfortable life during your elder years.

Deciding if you really need credit cards in your life

The last financial decision that can affect your life significantly is the use of your credit cards. Some people find it hard to completely cut off credit cards. It is not always because they have grown so accustomed to it. In some cases, people want to keep their cards so they can maintain a good credit record.

While there is some truth to the notion that credit cards can help you maintain your credit report, you need to understand how to use it properly. It can make or break your financial stability so you need to be very careful. Here are some tips to help you use your credit card wisely.

  • Limit your credit card use.

  • Pay off your balance in full within the grace period.

  • Monitor your interest rate and balance.

  • Keep only one or two cards.

  • Take note of the rewards program of your card so you can benefit from it.

Remember that a credit card is only beneficial if you can stay out of debt. If you are burdened with credit card debt and you would like to get rid of it, here is a video that you can watch to find out where you can get debt help.

Planning For Major Financial Decisions

woman making financial decisionsThroughout our lifetime, we are bound to make various choices that will affect our future in both small and huge ways. Every choice, no matter how small will alter the course of our lifestyle. Since our finances are a major factors in giving us a comfortable way of living, you need to identify the different financial decisions that you have to make.

One of our major goals in life is to grow our personal wealth so we are able to provide for our needs as they grow. If we fail to make the right decisions, it could cost us, not only a comfortable way of living, but also a debt free lifestyle. Debt is one of the financial mistakes that cost us a lot of money – wasted on interest and other charges involved with borrowing money. If you want to keep the fruits of your labor to yourself, make sure that all your financial decisions are made in such a way that will keep you from incurring any form of debt.

What financial steps can affect your life dramatically

But what are the financial steps in your life that can have the most effect in your future way of life? Here are different major financial decisions that you will have to make in your lifetime.

Education

Some people will not immediately think about this as a financial decision. But if you think about it, you will realize that apart from your skill or talent, you will choose a degree based on its ability to make you earn. Some high school students have yet to decide on what they want to do for the rest of their lives. These are the ones who rely on the income possibilities to choose a career path.

When considering your education, think carefully if you really want to put yourself through student debt just to get an education. While it can be considered a good debt, make sure that you get a loan that will not take you forever to pay off. If possible, work on side so any financial aid that you will get will strictly be for your tuition and school fees. Your day to day expenses can be financed by a part time job that you will get while on campus.

Paying off your dues

As soon as you finish college and you have put yourself through student debt, you may want to consider how you plan to pay it off. This is one of the financial decisions that could affect your life for the next ten years – if you chose the wrong way of doing it. Make sure you select the option that will fit your debt problems well and your payment capabilities too. Paying off debts can take a few months to 5 years. However, its negative effects can ruin your credit history for the next 10 years. Consider your financial goals for the future to help you decide on the debt relief option that you will use for your debt problems.

Getting a job

Getting a new job or even shifting career can be quite tricky. While finances is also important, do not lose sight of how it will make you happy and fulfilled. If you have both, you can be at your most productive state and that will help you earn more money. If you are looking for a higher raise, start by looking within the company that you are working for. They may be able to promote you to a higher position with better benefits. Just be honest with your employer and be careful when making that leap. Do not make rash decisions so as not to lose your main source of income.

Marriage

Although paying for a wedding will cost quite a lot of money, we are not really concerned about that. Our concern lies in the fact that you will be combining your finances with your future spouse. Make sure that you are honest with each other about your current financial standing – especially your debts. You don’t want to ruin your future together by keeping those high credit card debts a secret. Start by discussing your financial goals together. That should be a good way to begin discussing how you will merge your finances.

Major purchases

This is also one of the financial decisions that could build up your personal wealth or ruin it. These major purchases include a home and a car – or anything that will cost you a huge sum of money. If you cannot avoid borrowing money to pay for it, make sure that you have the means to pay it back and you will create a payment plan to fulfill your payment commitment.

How to make financial plans for your future

Making financial plans for your future is a good idea because it will help you prepare for any expenses that they may incur. It will also give you time to come up with different ways to keep your costs minimal.

If you have no idea how to start a financial plan, you may want to hire a certified financial planner that will help you reach your goals. A great place to start is through the NAPFA or the National Association of Personal Financial Advisors. But if you want to save on the service fees that they will charge, here are some tips on how to start planning for future financial decisions.

  • Create a budget. A financial plan will always begin with budgeting. You need to know how much money you have, where it goes to and how you can shift it so you can reach your financial goals.

  • Get rid of your debts. Before you are maximize your potential for financial growth, you need to get rid of the things that are pulling you down. In your finances, that will be your debts.

  • Make sure you have adequate reserve funds. You need your emergency fund so that you can finance any unexpected situation. That way, you don’t have to incur more debt or sacrifice your current payments just to meet that emergency need.

  • Invest your money. If you have extra to spare, you may want to consider investing your money. This is a great way to grow your income.

  • Save for your future. Of course, you need to prepare for your retirement and the earlier you start, the better it will be for you.

Smart Spending Tips: Buying Products That Lose Value Over Time

Smart Spending Tips Buying Products That Lose Value Over TimeWe all have to spend on various things. The current consumerist society tells us to buy products and to do it in abundance in order to have a convenient and comfortable life. But after all that we went through during the recession, that does not hold ground anymore. We need to practice smarter spending choices because we know that any financial benefit that we are experiencing today can quickly disappear in the future. You need to eliminate any bad spending habits that you got used to and start wising up when it comes to where you put your limited resources.

How to be smart when buying things that depreciate

When it comes to buying things and being smart about it, financial advisers will tell you to invest mostly on things that will appreciate. This includes homes, antiques, jewelry and other products that will increase value over time. That way, if you decide to sell them, you can profit from it.

But what about things that depreciate over time? There some things that we need to help us live a more comfortable life and yet they lose value in time. These include cars, electronic items, computers, mobile devices/gadgets and others. How can you maximize buying for these things?

We all need these things and despite their depreciation rate, they are unfortunately still expensive to purchase. So how can you be smart about buying them?

  • Never buy them using credit. It is never a good idea to buy things that depreciate in value over time by using credit. Not only will you end up paying more because of the interest rate, the money you lose will be greater when you factor in the depreciating value of the product.

  • It pays to wait for a purchase. Since it is more advisable to buy it in cash, you may have to wait before making the purchase. And since the product you intend to buy depreciates, you may be able to buy them at an even lower price than when you first saw them. That will bode really well for you.

  • How often will you use them? If you will use them all the time, it is wiser to buy your own. If not, it may be more economical if you lease it only when you need them. Make sure that you do the math to be certain which will give you more savings.

  • Determine the price that you should spend on it. Even if you are qualified to buy a really expensive car, you may want to hold back and buy only what you need. For instance, you could afford to buy a sports car but that can eat up a lot of gas. Consider the gas consumption and if it will really serve your purpose well.

It is very easy to overspend on products that are inexpensive but you have to realize that it will be more of a disadvantage if they also depreciate. So be very careful in your choices and ensure that it will benefit your short term and long term financial goals.

Smart spending is not about deprivation

In the end, you have to understand that smart spending is really not just about depriving yourself of things. It is more of finding where your money will be used with the most value. Our natural buying instincts may have to go through a lot of changes but with a little effort, you can implement these and practice proper financial habits. It pays to get the proper education when it comes to your spending. Even the government promotes financial education and you can visit MyMoney.gov to find valuable information that will help you maximize your limited resources.

If you really have to buy things that depreciate in value, consider buying pre-owned ones. Here are a couple of suggestions.

  • When buying cars… If you are on a budget, buying a secondhand car works really well for a lot of people. This is a great first car for most young individuals. Just make sure you bring along a trusted mechanic that will help you view the car and make sure it is right for the money that you are paying for it.

  • When buying furniture… The best time to buy is during the summer – when graduates are usually getting rid of the furniture they used in college.

  • When buying toys and video games… Kids get tired of their things easily and that means you should consider buying video games and toys second hand. Shop on Amazon or Ebay for selections.

  • When buying baby clothes and maternity outfits… You don’t use your maternity clothes always and buying second hand should be very economical. Thrift shops have great and clean clothes that you can use. For baby clothes, you may want to ask family and friends who have toddlers and ask if they are willing to give you baby clothes. Babies grow really fast and it is not economical to make them use new clothes all the time.

  • When buying entertainment things… DVDs, CDs, books and other materials that you can use to pass the time may be better rented instead of bought actually. Unless you want to collect them as classics, you should just borrow. You rarely watch a movie or read a book twice anyway – unless you really love it.

These are only a few of the things that you can buy secondhand. Remember that even if you can afford to buy something, being wise about your spending means knowing when to choose saving over spending. In the long run, you may find better uses for your money if you put it aside instead of spending it.

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