Getting smart spending tips is always a good idea. Earning a high income will help you improve your personal finances but it will not eliminate the danger of you falling into debt. Even if you are earning a 6-figure income, you can still make financial mistakes as long as you are implementing bad spending habits. The truth is, you can earn $30,000 a year and still have more than enough to put aside for your saving goals. The technique is to make smart decisions about where you will spend your money.
Our society places a lot of importance to spending. That is thanks to consumerism. According to an article published on Reuters.com, an increase in the US consumer spending is an important evidence of economic growth. When people are spending their money, it means they are confident in parting with their cash. This confidence is borne out of a positive outlook in the economy and their belief that they can earn back that amount.
The article from Reuters indicated that in May of this year, spending was at its highest increase compared to the past 6 years. Most of the spending was done on big-ticket items like automobiles. This bodes well for the economy as a whole but it can be dangerous for the average American household.
You need to remember that although you have more finances to spend, you still need to follow smart spending tips to keep your expenses from ruining your budget.
5 expenses that you do not have to spend much on
A study published on ConsumerReports.org revealed that 7 out of 10 Americans are now ready to make purchases – at least, the purchases that they put on hold. In fact, 60% of them have admitted having begun the purchase. Those who are within the age bracket of 18 to 24 have revealed that they are ready to make large purchases like buying a home or a new car.
This is to be considered as good news because a confident buyer means they have more money to spend after their basic necessities. While that is true, it is important that you rein in on spending too much money of certain expenses. There are a couple of expenses that we think we have every right to splurge on. But if you consider your options carefully, you will realize that spending a lot on them is actually not encouraged.
So for some smart spending tips, here are 5 expenses that we usually spend a lot on unnecessarily.
The truth is, any emotional spending is a recipe for disaster. This is why you need to be very careful when you are spending for your wedding. A lot of people think that this is a once in a lifetime experience or that there is really no price tag when it comes to love. But let us be reasonable. After all, you want to avoid being in debt just so you can get married right? That is just not the right way for you to start your marriage. Making your wedding special does not mean you need to spend a lot on it. Indulge in DIY projects that will help eliminate the need to buy things. Enlist the help of family and friends so they can contribute their skills. For instance, ask your talented friend if they can sing on your wedding day. That should eliminate the need to hire a professional. The same is true for your wedding host. Just ask you maid of honor to host the event. If your mom is an excellent baker, ask her to make your wedding cake. There are also many smart spending tips when it comes to buying your wedding dress, accessories, etc. Be creative and do not be ashamed to ask for help.
This is another emotional expense that you need to be careful with. Sometimes, your grief would want you to spend a lot on the last needs of a loved one. While your grief is understandable, the amount of money that you will spend will not mean anything to the loved one that you lost. Be smart about your spending choices and be reminded that you can get different suppliers for the goods and services that you will need. That is part of the regulation that the Federal government is implementing on funeral service providers. It is always best to get a package long before there is a need for it. That way, you can concentrate on your grief and avoid making mistakes with your funeral expenses.
A lot of people may dislike the idea of cutting back on their food costs. Well, this is not to say that you need to be cheap when spending on food and groceries. However, you need to make sure that you will spend smartly on it. The best way to be smart with food expenses is to cook your meals from scratch. It is also the healthier alternative – at least if you do it right. In the end, eating healthy will give you double the savings because you can stay away from sickness too.
Another expense that you need to implement smart spending tips is on clothing. We all need clothes. But you need to make sure that the money that you will spend on it will be reasonable. It is okay to buy branded clothes as long as you are getting the value for your money. Buy it if the quality of the clothing is at par with what you are spending – and not just to pay for the prestige of using designer labels. It is usually best to buy basic items that you can mix and match. Invest in accessories too. It can really liven up a basic outfit time and again.
Lastly, we have cars. One of the expenses that have risen over the years is the purchase of vehicles. The thing about buying cars is it will depreciate as soon as you drive off from the dealers. No matter how expensive or luxurious your car is, you need to remember that it will be valued less as soon as you start driving it. Be wise about how much you will spend on your car. You should not over spend on it but at the same time, you should avoid being too cheap. Sometimes, a cheap car will cost you a lot in terms of repairs and maintenance. Find the balance and go for the fuel efficient ones.
How to spend your money wisely
There is no doubt about it, we need to spend cash in order to get the things that we need in society. This is why you need to listen to smart spending tips. Here are three things that you can do in order to be a smart spender.
Build your lifestyle around your net income less savings
You may be advised to build your lifestyle according to how much you are earning. Believe it or not, that is not enough. You need to build your life around your net income less savings. That means you need to consider the income that you take home with you and remove the amount that you will save from that income. Only then should you consider the type of lifestyle that you can afford. According to an article published on NBC.com, one third of households earning $75,000 or more are actually living from paycheck to paycheck. That is because they have built a lifestyle that is equal or probably more than what they are earning. You need to aim lower than what you can afford because you need to build up your savings for your future.
Create your budget
Another tip that you can do is to create a budget that you can follow. If an expense is not part of your budget, then think twice before you will spend on it. Make sure that you will create a budget plan that is realistic. That way, following it will not be too tough. If you restrict yourself too much, you might end up not following your budget plan. Remember that a budget plan is one of the most important smart spending tips that you need to implement in your life.
Borrow only when necessary
Lastly, you need to borrow money only when it is necessary. We are not saying that you eliminate debt completely from your life. You need to use credit so you can maintain a high credit score. But that does not mean you should keep on borrowing every chance you get. There are do’s and don’ts when you are borrowing money. Make sure you are aware of them and that you will follow them whenever possible. When you know how to use debt, it can actually help you improve your financial life.