More Managing Spending Tips

Welcome back! Today I would like to continue where I left off last week. See below post if you have missed it.

Last week, I mentioned that the first step to creating your wealth is to manage your spending. Mortgage debt is one area that we must carefully handle to ensure that we do not commit too much and for too long a period. Why? and How? See post below.

I am sure you know as well as I do that if your income is not spent away, it would be saved. Which one of the following is your habit of managing your income?

1. Earn and spend all that you have earned;
2. Earn, spend and then save the balance, but subsequently spent it away on big ticket items or doing nothing to grow the money;
3. Earn, save and invest on cash generating asset, and then spend.

Which habit do you think will generate you more wealth over time? The answer is obvious, isn't it?

Hence, another way to manage your spending is to PAY YOURSELF FIRST. And you pay yourself first because you have a reason for doing that. How much you need to set aside will of course depend on your financial goals. Refer to below post on "begin with your end in mind" to identify your goals and determine how much saving you would require to achieve your financial independence.

Now, let's ponder for a while about your buying habits. Has it happen to you before that you bought something and later realized that you actually do not require them? Very often, isn't it? Yes, and this is called impulse buying. To manage your spending, this habit has to change. You need to ask yourself whether do you really need this. You have to differentiate between needs and wants. Spending on the latter is not a necessity and should be avoided or postponed till you truly have excess cash at your disposal

Good, I hope you have learned some useful tips on managing your spending. Remember that each dollar spent will cost you in terms of opportunity cost in the future. Stay tuned to find out more!