Do you have a weekly budget? Do you have a plan to help you with your regular expenses? One of the great secrets to building a wealthier lifestyle is to plan your expenditure in advance rather than simply splashing the cash whenever the urge to splurge overtakes your purse or wallet. Impulse buys can be fun but planning adds weight and security to your spending habits. When you work out how much you’re earning and then calculate how much you afford to spend, you take better control of your cash flow. It’s a firm rule in the business of developing long term wealth that we need to set aside an amount of money to save every month. This is fundamental. Once you’ve set aside your savings, whatever remains is available for spending.
It’s amazing how often this basic rule is ignored. Save first. Cash is king.
When you start to plan for items you want to buy, you take more time to work out the best deals, looking for discounts and bargains, squeezing better value from every penny, employing the virtue of thrift and taking better control of your money. The fact is that we’ve witnessed an unprecedented explosion in credit in recent decades and this burden of debt has crushed the economic freedom of countless millions of families in supposedly developed economies. We haven’t used unfashionable expressions like ‘financial discipline’ very often but this phrase is due to make a comeback as we learn to control our money more carefully and apply the basic, simple techniques of savings and thrift to restore our economies to more sustainable levels of fiscal balance. The same rules that apply to a household should apply to any spending environment.
One of my financial heroes was proud to show me round his new headquarters and reveal that all the furniture in the offices had come from a self-assembly catalogue. He and his staff had assembled the desks and furniture over a weekend and they were justifiably proud of their joint efforts. The result was very impressive and everyone was pleased that the company hadn’t blown a fortune on expensive, designer furniture. But then the staff were also shareholders in the business and they knew that good economic practises led to bigger bonuses, better dividends and a higher share price. It figures.
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