|Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.|
How to Save Money Without Sacrificing Lifestyle
For many people, there is a natural tendency to conflate saving money with having to sacrifice lifestyle -- as if they have to make a choice between the two. While it’s true that choosing to dial down your lifestyle can result in a fatter savings account, there are many ways to live your idea of a good life while contributing more to your future happiness.
Start with an Attitude Adjustment
When given the chance to define their lifestyle around their own values, beliefs and attitudes, people tend to make money decisions based on a purpose rather than the pursuit of more.
It’s an attitude change that can transform the way you consider your purchases: Is it a need or a want? Do I really need it? Can I get by with the one I already have? Wouldn’t a used one be just as good as a new one? Running your purchases, especially your impulse purchases, through a decision framework like this could save hundreds or thousands of dollars a year.
Create a Spending Plan
Some people view living by a budget as some sort of confinement. Consider for a moment that living by a spending plan can actually be liberating. All of your spending decisions can be made for you, so there is no time wasted mulling over purchases. Your spending plan can be created to support your chosen lifestyle. The only requirement is you do not deviate. The plan must reconcile each month to the positive. Any negative spending (spending more than the plan allows) requires an adjustment in spending from somewhere else.
Pay Yourself First
The only way to ensure you have enough money to meet your monthly savings goal is to pay yourself first. If you pay yourself first, you need to adjust your spending plan around the money you save. Schedule an automatic transfer from your checking account to your savings account on your pay day. If you come up short in your spending plan, you simply need to adjust your spending somewhere in your plan. If you come out ahead in your plan, you can decide whether to increase your savings or your lifestyle.
Have a Purpose for Your Money
Generally, if you don’t have any real purpose for your money, you are likely to spend the next dollar you earn on something you don’t really need. Having a real purpose – a goal – for how you want to achieve your own ambition for a good life, tends to give more weight to every little financial decision you make. Without a purpose or a goal, you are more likely going to engage in the pursuit of “more,” which might improve your lifestyle today, but it can never lead to any real fulfillment. The most important decision you can make today is what you want your money to do for you in the future and make that your purpose.
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