A goal without a plan is just a wish. If you really desire to save money, you have to be intentional about it. If you just wish to save money, you will keep wishing to save money. You need a plan and that is why you’re reading this. I know what you’re about to say: “But I don’t have enough money to save!”. I’m sure you can also guess my response to that which is: Yes, you do, it’s precisely because of that thought that you end up never saving anything. No matter how little you earn, you can save part of it. If you can’t save 1000 F when you’re earning 10000 F, you won’t be able to save 10000 F when you’re earning 100000 F. Here is a quick and easy 6 step exercise that will help you to start thinking more purposefully about saving money:
1. Brainstorm on your recurring expenses
Think about all the recurring expenses you could reduce or eliminate to cut down your expenses. Some of these include: cell-phone bills, internet data, dinners, outings, shopping, movie tickets and much more. The truth is that you don’t really need all of these. It’s very common to make impulse purchases. A real superpower is going into a shop and coming out with only what you intended to buy. Think about what changes you can make. It’s also a good idea to write all of them down.
2. Count the Costs
You now have a list of recurring expenditures. How much do they cost? Take note of the most significant expenses and add the related costs. Also evaluate how often in a week you spend on these items and write down the total cost. Let that value sink in. You’ll be amazed at how much you actually spend on certain things. It makes you wonder whether all that money is really worth it.
3. Rate the Expenditures
On a scale of 1 to 10 with 1 being the least enjoyable and 10 the most enjoyable, rate each of these expenditures. Ask yourself how much joy and fulfilment you get from these items and attach a value to each one. This will give you an idea of how valuable they are to you.
4. Imagine being Financially free
What if you had absolute financial freedom? Imagine for a second that you were financially free? How will if feel? What joy will that bring to you? It must feel good to never have to worry about your bills right. Working not because you have to but because you want to. What will you be able to experience or enjoy? A whole lot. If you can’t even imagine being financially free then there’s no way you’ll get there. Einstein summed it up well in this saying:
“Logic will get you from A to Z; imagination will get you everywhere.”
5. Decide which is more important
Compare the pleasures you get from the recurring expenses to the feeling of being financially free. Which do you think is better? The choice is obvious. The happiness and pleasure from activities like shopping, going to the movies are temporal. Financial freedom enables you to enjoy these same things whenever you want to. There’s this important concept called delayed gratification, which is essentially postponing comfort now for better comfort later. It’s what every successful person was able to do. You need to do that too if you want to become financially free. However, there should be a balance; you shouldn’t completely cut off every form of enjoyment in the present. That will only make you miserable. It’s okay to enjoy yourself occasionally; you need it.
6. Eliminate at least 3 expenditures
The final step is to write down at least three expenditures that you’ll eliminate. Then calculate how much you’ll save in the next year by doing this. Seeing how much you could potentially save will motivate you. The more you’re able to eliminate the better. You can streamline your life down to the essentials and a few occasional splurges.
Find below a sample table template that you can use to perform this exercise.
No | Activity/Item | Cost(A) | No of Times/Week(B) | Total Cost(A *B) | Degree of Enjoyment(1-10) |
1 | | | | | |
2 | | | | | |
3 | | | | | |
4 | | | | | |
5 | | | | | |
| Total Cost/Week | | | | |
| Total Cost/Year | | | | |
Like any other plan of action, it will only work if you work it. You have to take action. Why not start immediately after reading this. Take time and brainstorm on the things you spend money on. We hope you were enriched by this and that it helps you to save purposefully. Don’t forget to SUBSCRIBE to our blog. Thank you for reading and until next time, BESTech remains your Best bet.