I believe in investing and make your money work hard for you and that’s what we’ve talked about probably more than half of the time in my website. However as much as I want everyone to learn to invest I want to be balanced and teach more and more people to be good stewards of their money. Because sometimes its not about how much we earn and invest but rather how we spend less from the things that we make.
That is why for the past few weeks we have been talking about: Is it wrong to be kuripot?, 3 Financial Planning Tips to Spend Less But Still Enjoy Valentines Day, Should you spend your bonus pay?, How can you save money?, Vacations, Savings, and Investments. Can all of this go together?, Smart Savers: 10 tips to save, save, and save more from your income!, and so much more!
I want you to not just earn a lot but also keep a lot. I want you to not just reach your dreams but also stay there and live a life of more than enough for years and years to come. That’s why it’s just fitting for this article I am guesting, Edmund Lao, one of the most kuripot persons that I have met! As he shares to you the “10 Tips on How You Can Avoid Overspending”
Onward towards financial freedom!
Catch me in my live training events! (quick plug)
The heart of why I do this seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more on how you could time the market checkout the trainings below.
Having retired from the corporate world late last year, I realized that I was quite lucky to have been financially educated by my parents early in life. Ever since childhood, I was accustomed to a lifestyle of enough and contentment. I was always content with what I have and never had in mind to compete with my peers who have more than what they want. This habit never left me until I reached my adulthood and even up to this moment. I have heard stories of retirees, boxing champions and lotto winners who had so much money then only to squander it in a few years. The culprit : excitement and panic which led to compulsive overspending. And then they are back to their previous situation. Since they had not controlled their emotions, they became a classic example of rags to riches to rags story.
To avoid the same situation from happening, eliminate overspending. Below are some tips.
1. Accept brutal facts.
This is the most important factor. Unless a person does not admit that there is something that needs to be changed, he will never take steps in correcting his wrong habit.
2. Begin with the end in mind.
This is my favorite tip, taken from the 7 habits of effective people. This is equivalent to goal setting. Without a goal, a person would only be just like stray animals who wander without direction. Having the end in mind might be terrifying for a person, but that will be his motivating factor to do act now to change things for the better. For instance, if a person wants to retire comfortably, he has to set aside an amount based on the plan to reach his goal.
3. Spend only on needs, not wants.
Expenses are here to stay. We need to spend in order to live. Spend only on basic needs. Basic needs are things that sustain our lives. Majority of people who get into financial trouble spend on wants like new gadgets. I remember a story by my former employer. He said a pastor-friend always complain that he finds it hard to make both ends meet. Upon probing, it turned out that the pastor always upgrades his cell phone even if the old one was just months old. I suggested that since he can not control himself, he must let his wife take control since the wife is good in budgeting.
4. Keep your money away from you.
This is a very effective technique I used ever since I started working. Every payday, I invest 30% of my salary in time deposit where the rate was 20% then. By doing that, I effectively divorced my money. So whenever I go shopping, I only do window shopping. Doing that only my eyes hurt but not my purse. Later, I bought that the item I liked when it was put on SALE.
5. Cut your credit card.
Credit card is one of the most ingenious inventions of the 20th Century. Credit card makes purchasing very easy. However, convenience has a price. A lot abuse the use of plastic money and end up spending more that they earn. If one can not handle his emotion, better cut the card or better not to have a card at all.
6. Say No.
Most of the times, we spend is because of peer pressure or too much generosity. I remember years ago, a worker took from me cash advance. When I asked for what purpose is the loan, he said his relative asked his help. To which I said, “It is not bad to help for as long as you are able to help yourself. If you can not help yourself, how can you help others?” I am not teaching him to be selfish. I just want him to be realistic. The problem is that he simply can not say NO. As expected, he shouldered the loan which strained his budget.
7. Know how to wait.
In investing, we pay a high price for waiting because as time passes, our opportunity to grow money passes by too. In spending, not knowing how to wait results to a person losing a lot of money. There are those who succumb to get rich quick schemes. They simply do not follow the principle that it takes time to grow their money. The only way to get rich quick is to get rich slowly as proven by the story of Henry Sy. Another idea is to wait for SALE period. I have a friend who uses this technique and often buys branded items art a very affordable price.
8. Use group buying sites.
Group buying sites sprouted like mushrooms in the past. By availing of the deals, one can get as much as 50% off the market price. Just make sure you buy things that you really need.
9. Make a budget.
A budget will help determine the money that will be used for expenditures. By allotting an amount for the said expenses, one makes sure that his money will be spent properly.
10. Avoid last minute shopping.
Most of the time, people do their shopping at the last minute. This is specially true during the Yuletide season. Poor planning often results to buying a certain item without the proper canvassing, which results to buying it at a higher price. By carefully selecting the store, one can even buy in bulk to get a lower cost. Usually, the best time to shop is during post holiday season where the items are marked down due to clearance sale. Spending need not to be stressful. As long as one adheres to a spending plan, he will never experience over spending.