How your budget is going along? Managed to slow down the negative variances? When I first did my budget, I feel stressful, tired and very de-motivated. It is not wrong to feel that way. Anyway, you have work hard to earn yourself that monthly salary, then why should you work even harder not to spend them? Why should we cut down our food, the time we normally spend in cinema or game arcade, the trip around the world or all those things that we love sooo much to do, just because we need to commit to our budget. Might as well spend all our income to enjoy ourselves and screw our budget, right?
Budget do not means that you have to sacrifice all your fun time. Simply said, when we do not have budget, we spend too much on having fun, until we overspend what our income allowed us to. Every month of overspending, causing us to try and gain more money for our enjoyment through loans and credit cards. Now, we reached that level where our asset (source of income) is too low compare to our liabilities (expenditure) and bank chased us to settle our debt. We had all the fun before, now time to sacrifice our high maintenance lifestyle to keep our life back on track.
You should set a short term goal so that you know how close you are to achieve it. At least, that will give you an ability to see how is the progress. Your first short term goal, is that with all your accumulated income, you must shape your life to spend on 70% of your income only. That 70% included paying bills, daily spending and also paying all those monthly installments. The balance 30% must be set aside for savings and emergencies.
Why should I save my money? I work hard for that salary, I should enjoy spending them. Saving money means that I can enjoy my saving after 10 years, right? So, what is the different of spending my money now than spending my money 10 years later, when I am older and do not have any will to have all the fun.
Saving money do not exactly means that you can only enjoy it once you are retired. Saving money also do not means that you are paranoid and worry something bad might happen to you in future. Do you know that saving money can help to increase your income in near future?
For example, if your accumulated income now is $2000. 70% means that you can only spend $1400 and saved $600. If that $600 were invested in an investment with 10% return per year, by the end of 1st year, you will get $720 dividend. Instead of compounding the dividend, you use the $720 to support your income for next year. This means, that $720 is supplying additional $60 income monthly for the 2nd year. So instead of having only $2000, you now have $2060 income and with 70% of that, you can spend $1442. If you continue practice this habit, by the 6th year, you should have total of $2964 income supported by your investment dividend, 70% of it which is $2075 for spending and accumulated saving of $40,440 for emergency. Imagine that! From able to spend $1400, now you can spend $2075 and still have money for savings. The more money you put aside and grow them, the more dividends you going to get. That dividend is all yours to spend. Who said that savings is boring and meaningless?
Saving can actually help you to gain your monthly income. More monthly income means more money to spend and more money to save which in turn will grow more money for your future income. That is exactly what the saying “Rich people become richer and poor people stays poor” means. If you know how to maintain your budget and learn to grow your money, the money will in return work for you instead of you need to work for your money.