Spend Wisely Now And Save Yourself From Future Disaster

It is a widely acknowledged fact that saving money is a difficult proposition – more so, for people who are extravagant and driven by a tendency to spend. The fact also remains that there are many people live paycheck to paycheck without any possibility for saving. But please remember that everything in life is impermanent and unless you spend judiciously now and save money, you will be hard put to face future disasters.

It can be said straightaway that you cannot save money unless you have a proper budget and adhere to it. The simple reason is spenders who do not have a budget can not track how much money is coming in and how much money is going out. A budget allows you to take inventory of your financials and lets you set specific financial goals. If you do not wish to end up as a debtor and want to save money, then have a spending plan. Luckily, creating a budget to help you spend wisely and save for the future is not difficult and does not need help from any financial professional.

There are two types of expenses – the fixed costs and the variable or the flexible costs. Fixed costs are those that do not change from month to month and examples of fixed costs are mortgage or house rent, insurance premium, transportation, school/ college fees for kids, loan repayment, if any etc. You may not have much control over the fixed costs.

Flexible costs are those that can fluctuate from month to month, like groceries or utility bills, entertainment expenses, health care medicine bills and casual spending. Most people discover that the casual spending category is much larger than they expected. And when they review what they spend their money on, they are shocked by the small items--coffee, magazines, fast food--that all add up to a significant amount. Others are surprised by how much they pay for utilities like power consumption and communication (cable, cell phone, data services, internet etc)

Analyze your spending to determine where you are overspending and where you need to cut costs or re-evaluate your spending pattern. Create a pragmatic budget to determine what your target spending towards flexible costs should be each month, knowing that some months will be more and some months less. Try to restrict your spending as close to the target as possible.

When you are shopping for food or other essential items or visiting a shopping mall, go with a prepared shopping list. It will help you to organize your purchases. There are people who are impulsive buyers and when they see something attractive or tempting, they purchase it - whether they need it or not.

When framing the budget, you will finally be able to arrive at the two basic figures - earnings and spending. Subtract your fixed and flexible expenses from your monthly income. Hopefully you will have a healthy amount of money left over for savings. If your income falls short of your expenses, then you need to rethink as some spending needs to change. As a rule, set apart minimum 10 percent of your total monthly income towards savings. This is possible if you consider your monthly income as less by 10 percent. However, the more money you are able to save beyond the targeted 10 percent, the better.

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