The Importance Of Spending Less Than You Earn
Have you accounted for every coin that comes in and out of your life? Doing so can be very interesting, since this way you will know why you are unable to save. Spending less than you earn is very important. But, for this, you must control your income and your expenses.
The vast majority of people do not keep a control of this type. This causes them not to know why they do not arrive at the end of the month with certain money. Also, they are often surprised that other people with less do show up and still have more than enough.
The reason may be is that these people know what they are spending on and are able to stop investing in what does not bring them any benefit. Let’s see how to spend less than you earn with some little tips.
Don’t waste money
Perhaps, when you begin to commit to keeping track of your expenses and your income, you realize that most of your money is going to something that is not essential. To do this, we have to differentiate between what are basic needs and what are not.
Those expenses that may be justified will have to do with food, clothing and household expenses. All these expenses are necessary. However, there are others that do not.
For example, if we are smokers, we may spend a large part of our money on tobacco. Also, it is possible that our car, if we have it, represents a large investment of money.
Being aware of all these expenses can help us eliminate a bad habit from our life. We can even start using public transport or walking to go to certain places that may be close to us.
Bet on your financial freedom
Spending less than you earn will help you have a cushion of money in case something unforeseen happens to you. For example, you get fired from your job, you have to make a large investment in a new car, your rent goes up …
Any unforeseen event can cause us to stress if we are not prepared to face it. The moment we spend less than we earn, we can save. The more money we have saved, the more financial freedom we will have.
What is financial freedom? How long we can live off of our savings. This is calculated dividing all the money that we have, and that we can have it to spend, by the average expenses that we have monthly.
Thus, if we have saved about 10,000 euros and our monthly expenses are 800, this means that we can live a year without income. The more financial freedom, the more secure we will feel.
Invest wisely to spend less than you earn
However, although spending less than you earn is very smart, it is not positive that the money we save is stopped. We must know how to get the most out of it. Therefore, you must learn to invest in what will bring you benefits.
For example, if you have already detected that a large part of your income was destined for tobacco, you can eliminate this bad habit and do something better with that money that you now have left over. Instead of wasting it, save it to invest in liabilities.
What are liabilities? They are those goods that can bring us some benefit. For example, a house, storage room or office that we have for rent, an amount of money in an investment good that earns us monthly interest …
There are many liabilities around us that we can invest in. These will help us to better manage our money and invest it in something that will not bring more money. In this way we will eliminate many worries and we will be able to live enjoying greater well-being and tranquility.
Spending less than you earn brings you many benefits. But, for this, we must keep an exhaustive control of all our expenses and income, even if it is only one euro. We can create an excel on the computer with all the information or buy a book.
There are several books that we can buy that will help us save. On its pages we will find recommendations and even identification by colors to be aware of what we are spending the most money on. We encourage you to discover what is the best way for you.
