Christmas spending got you down? Don’t fret. Follow these tips to stop spending on the things that don’t matter and you’ll right your financial situation sooner than you can say ‘cash back’.
My girlfriend loves “luxury.” Before we started dating, she always used to take cabs, dry clean her clothes, and spend too much money at the bar. My parsimonious ways have helped her change those habits. Now we walk or take public transportation, dry clean only our finer clothing, and if we do decide to go to a bar, we try to have one drink (and rarely is it a top-shelf liquor).
The old saying ‘buy good, have good’ still rings true. I remind myself of this when clothes shopping, especially. It’s much better to dress in the European manner of owning a smaller, but more classic and expensive wardrobe than in the American tradition of having a closet full of clothes that were once fashionable and which we no longer enjoy wearing. The same goes for shoes—it may make you feel good to wear new clothes while they’re still new, but unless you love that shirt, it’s not worth buying.
I love to eat out too, but I try not to do it more than a couple of times a week. Cooking at home always saves money, especially if you’re cooking for more than one person at a time. If you are cooking only for yourself, try to cook twice as much and bring your leftovers to the office for lunch.
You need to save a little bit from every paycheck, whether you plan to spend it on a rainy day or a 401k. Too often we don’t diversify our savings, so that all of our money goes into the short-term (for savings between six months and two years) without focusing on the mid-term (three to five years) or the long-term (ten years plus). Different kinds of investments, such as savings accounts, mutual funds, and government bonds can help you spread your assets wisely.
Consider what you love to spend money on most of all. Is it travel? Electronics? Giving gifts? Whatever it is, set aside money for it, and sacrifice your other expensive priorities. It may take a month or so to get used to, but once you start spending on what you want, instead of what you’re used to, it will make for more savings. Plus, these new habits will dissuade you from impulse buying and help you value what you are saving for when you finally do buy it.
If you really want to improve your financial situation, get rid of your credit card debt. Unless you’re charging to change your own life or fulfill a dream you’ve always had, do not spend more money than you make. And if you are going to charge large amounts in order to achieve something you’ve long desired, make sure you are prepared for the future lifestyle sacrifices this will require.
People have different agendas and different life plans. Maybe your friends are making more money than you are. But before jealousy rears its ugly head, consider that maybe they won’t make as much as you will in the future. We all have different paths in life, so don’t focus on what your friends have.
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