Keeping things Balanced and Saving Money

If think about it then you will see that everyone put their money into three basic groups: necessities, luxuries and saving for the future. If you ask people which group is more important and in which order of importance they place these groups, then most people will say: necessities, saving for the future and luxuries.

But if you really look at the spending habits of those people then you will see that they don’t live by what they say. Saving for the future will come last in most cases.

This doesn’t mean that this is bad, as long as the spending is evenly spread out over all of these three groups. The reason why so many people are in poor financial shape is that they put more than they should into one of these groups then the others.

Or even worse, they confuse one group with the other.

I will give you some examples:

Luxuries group instead of savings group
Some people put more money into the luxuries pile then in the saving for the future pile. These people often say: “I only live once!” or “Why should I save, I could be dead tomorrow. So I life now!” or “I’m still young, in a couple of years I will start saving for the future, now I just want to have some fun.”

The worst thing is that these people know that they are putting all there money in (wrong) luxury pile. These people think that they know what they are doing; they just want to spend all their money now. Most of them never change or start saving for the future far too late!

Confused between necessities and luxuries
Some people confuse the necessities pile with the luxuries pile. They think that the latest model cell phone or a HD television is a necessity in their lives, but the truth is that most of these things are just luxuries.

We all know at least on of these people. One moment they complain that they don’t have any money for savings or that they barely are squeezing by and on the other moment they buy an iPhone (and in most cases their old cell phone is still working!)

So, how can you balance the groups? It’s not that hard, just follow the steps below:

1. Determine necessity
You need to go through everything in the necessities group. Determine what is really a necessity and what is not! For instance: there are people that include a $25 bottle of wine as “food.” This is not a necessity but a luxury! Another example: Do you really need a cell phone or can you go without it?

If you think about it for a while, you will see that most things in life are luxuries! If you life more frugal, it will shrink the costs of many things in the necessities pile, thus more money for saving for the future!

2. Balance luxuries and saving money
You need to try to keep a balance between luxuries and saving for the future. If your pay check reads $1000 a week and you spend $500 on necessities like mortgage, food, insurance that will leave you $500. Way don’t you put away $250 and spend the rest on nice thing in life, such as: technology, good food or drink, parties and so forth.

In conclusion
You don’t need to deny yourself everything enjoyable to have financial discipline. You just need to find a balance between the three groups. You need to determine what you need now and what you need later. In both cases you want to enjoy life, don’t you? Just find your balance!

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One Response to “Keeping things Balanced and Saving Money”

  1. Kelli Myers on April 17th, 2008 09:12

    Its true that the spending habits can affect a person’s future but its also true that even though almost everyone knows this, people hardly think about saving or spending for necessities.