Most people don’t know the art of growing money. There’s an old saying that if you care for your money today, it’ll care for you tomorrow. People must have this saying etched in their minds forever, and it must affect their financial decision making.
However, money management or being responsible with money is not that easy, especially if you don’t handle money matters in a sensible manner. I’ll try my best to clue you in on how to handle financial matters like an adult.
When budget is tight
A problem many face is that they are good at saving, but not when their budgets are tight. We all know that a tight budget eats away savings, but when it plays out in real life, we feel distressed and powerless to do anything.
One important aspect of sensibly handling money matters is being able to save even with a tight budget. Not all people, unfortunately, are capable of accomplishing it. Here are a few tips to help them save even when they are on a tight budget.
Use cash, not cards
Always pay with cash. Try not to use credit/debit cards. If you are wondering what’s the rationale behind it, studies have shown that cards make you less frugal because the money is virtual, not real. It’s a weird psychological shift, but studies have revealed that it’s real, and influences people’s decision making.
When you pay with physical cash, the tangibility of the money comes into play, and tricks your brain into thinking you are paying a lot. But when you pay digitally, the tangibility aspect disappears, which is why you don’t feel the bite even though you pay more.
Buy second hand stuff
With the expansion of the Internet, everything is just a click or a few clicks away. Shopping for used goods has never been easier. You can buy anything off the Internet for a decent price. Use this to your advantage when you are on a tight budget.
Second hand stuff, especially furniture, garments, ceramic fittings, etc cost significantly less expensive compared to off the shelf stuff. This is true regardless of whether you are buying online or offline. People often shy away from buying used goods because they have doubts about the quality.
They need to understand that electronics items are unpurchasable after the expiry of consumer warranty. But other stuff don’t fall in this category. Feel free to buy them when on a tight budget. You won’t have buyer’s remorse and the damage would be tolerable.
Explore minimalism
Minimalism is not just a style statement. For lots of people, it’s the only way to live life. The best part of living a minimalist lifestyle is that you could save a lot of money, even when you are on a tight budget. Some people support minimalism for ideological reasons, some do it because their political beliefs align with it. You could follow the minimalist trend for purely pragmatic reasons.
Minimalism is not austerity. People choose to live a minimalist lifestyle because they see no point in consumerism. The perils of consumerism become clear when you look at your credit card bill. The more you spend on flashy stuff, the higher your expenses, and the harder it gets for you to save. Minimalism gives you a break from this never-ending cycle and helps you grow your savings.
No more debt
Be hard on yourself. Keep telling yourself that debt is bad for your finances. When you are on a tight budget, the last thing you want is more debt. Not only that you’d be worrying yourself sick how to pay off the debt, but if the central bank increases the interest rate (which is a real possibility), your finances would be greatly affected. You could bottle up all these worries by making a firm stand that you won’t incur any new debt, and if possible, pay off all your existing debt in time.
Living debt-free is perhaps the most effective way to grow your savings. There are so many people out there who earn really well, but are unable to save because debt erodes their income. Getting rid of debt is not easy, what’s even more difficult is making a promise to not incur further debt and sticking to that promise. But if you could pull it off, you could save more.
Make savings rewarding
This is really effective. All you need to do is reward yourself for saving. The reward could be as little as a chocolate bar, or a trip to a nearby vacation resort. Psychologists believe rewards motivate people to take on tasks that they wouldn’t otherwise take on. Use this hack to save more.
Summing up
The five tips discussed here are for people who are on a tight budget, yet want to save more money that they spend. If you are one of these people, follow the tips religiously. You’ll see results.