While picking up a pizza at the local pizzeria, I noticed a well-dressed young woman in her 20’s wearing a new Louis Vuitton handbag struggling to pay the $12 pizza order.
She used her debit card, credit card and $2 in cash to pay for it. She drove off in a white sporty BMW. At first I felt sorry for her and I could not understand how someone who looked like she had money could barely pay for pizza. How many people do we know that spend money on “looking rich” yet don’t have enough saved up to make ends meet? The issue is---are we so bent on keeping up with the rich that it is making us poor? It comes down to choices and lifestyle…so if the “posers” want to continue the charade going broke, let them. Meanwhile the “real” wealthier people are managing their finances, have goals to accumulate money and spending it according to their lifestyle---not pressured into it.
If you're ready to start saving or ramp up your current investment initiatives but there just doesn't seem to be enough money left over at the end of the month, don't give up.
The following strategies could help you manage your money better and free up resources for your financial goals.
- Start budgeting. While most of us know what a budget is, how many of us actually use one? A budget can help you chart your cash flow by recording all of your sources of income and your fixed and variable monthly expenses. Once you determine where your money is going using a budget, you can prioritize your needs and potentially identify expenses that could be eliminated.
- Cut down on credit card expenses. Avoid using credit cards whenever possible, but if you can't, at least work to pay off your debt. Consider transferring your balances to a card with a lower-interest rate, and try to pay at least twice the minimum monthly payment.
- Watch transportation costs. Do you really need a brand new car right now? You could save thousands by purchasing one that's just a year or two old and yet still has a warranty. If you purchase a car -- new or used -- carefully consider whether to finance or lease it. The decision could dramatically affect your monthly expenses.
- Put your extra cash to work. Did this year's tax refund, raise, or bonus burn a hole in your pocket? The next one doesn't have to. Make plans now to invest it.
- Cut down on "luxury" spending. If you only go snow boarding or skiing twice a year, it might make more sense to rent equipment instead of buying the latest model and watching it collect dust the rest of the year. Renting movies instead of paying $8 or more to see the latest release and bringing lunch to work are other ways you can watch your bottom line without cramping your own style.
It may be difficult at first, but once you start you'll see that a little bit of discipline can make a big difference when it comes to finding the money to pursue your financial objectives.
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