Thursday, May 17, 2012, AM | 3 Comments
You know, we all dream, dream about something. Most of us dream about winning a lottery to become financially independent. We seldom think about working harder and smarter for money. But, there are ways to make money through your instinctive smartness which everyone possesses, being a member of the human species.
The old adage “A penny saved is a penny earned” held true yesterday, holds true today and will hold true tomorrow.
You have to change your mindset and be a saver than a free spender and I emphasize the words free spender. We have to spend. There is no question about that. But spending wisely is the essence of saving.
They used to be, instead, concerned more about natural disaster or the long illness of a close relative.
Come to think of it, relatively speaking, these days
- It is highly likely to lose your job,
- It is highly unlikely to face a natural calamity.
It’s like going to the dentist
The financial fire drill, step-by-step, is like going to the dentist. If you have flossed – once a day – and brushed – twice a day – regularly, then going to the dentist should be a breeze and not something to dread upon.
Whether you have a job or not, spend wisely. First take care of your needs. You have to eat but be frugal about it. Don’t be wasteful and be economical. No need to buy $10 a pound salmon or shrimp when you can safely buy chicken.
Be discrete about spending. Spend on something that you really need. There are people who shop for the sake of shopping. I say it is showing off.
You are a true friend to someone by how well you communicate with them and how well you treat them. That’s how you can impress someone. Very few people get impressed by how much you spend in the mall.
Spend wisely on eating out, vacations, household utilities and the like.
You can get into debt so easily by not realizing how much you spend on daily things, and unnecessarily I might add.
Raise your savings level
When you spend wisely, you save automatically. They are both mutually exclusive. On goes up, the other must come down. It is wise, then, to keep your savings at higher level and your spending at a lower level.
Adjust your asset allocation
If you turn to your savings, experts suggest adjusting your asset allocation so that your investments are much more conservative. After all, you don’t want your mutual funds plummeting while you are also out of work.
Save your retirement – instead borrow
If you have lost your job and you are about to deplete your savings account, don’t think about spending from your 401(k) and your IRA accounts.
Instead you can borrow but borrow at a minimum to last you till you are back on your feet.
Use credit card to pay for expenses than using cash. That way you get money free for 3-4 weeks. But make sure to return it back to whomever owns the money.
As always, if you want to be on a path of financial success:
- Pay special attention to your personal finances.
- To invest, find a good financial adviser.
- To be debt-free, find a good credit counselor.
In a Nutshell
Do think about the fact that your financial situation can change really quickly. It has, may be not for you for now, changed for the worse the last couple of years.