Using Frugality and Time to Save Money
The Value of Patience and Making Your Money Work for you
Nov 15, 2009
The art of saving can appear to be a gift sprinkled over a small few. It can however be an acquired skill and is often an attitude mindset. Frugality recognises needs rather than focusing on material wants.
Being Wise With Finances
In life it is nice to have things that one wants and to be comfortable, but the long term wants and comfort should be focused on, rather than instant gratification. Those that have the decadence of spending money on wants would do well at times to consider focusing on needs instead.
Saving money can come in the form of many different areas:
- Spending money on needs rather than wants
- Putting money aside to earn interest on it
- Avoid taking out loans unnecessarily
When purchasing only those things that are needed and avoiding buying on a whim, there are often finances left over that can be used to invest and produce a return. To test out whether something is really needed, consider saving up for it over the longer term and at the end of this period purchase it if the need or desire is still there. Avoid racking up bills on a credit card.
Some find that after saving for a particular item over a period of weeks or months that item is no longer on the ‘must have now’ list. This provides positives two-fold: money wasn’t spent unnecessarily and funds have been put together that can be used to further generate an income.
Earning Interest Through Short Term Savings
Term deposits are a great idea for a sum of money that is being saved ‘for a rainy day.’ Maybe it is to be used in the near future but there’s a time frame of 30, 60 or 90 days before it will be used. Why not put the money to work in a term deposit? The interest gained may only be a small amount but why turn away money that is easily generated?
In this way time is working with one’s income to create more money. Sometimes such funds are available at opportune times for unforseen expenses or to pay off a loan quicker.
Loans are these days a way of life whether it be for a mortgage, car, education or another item that at the time cannot be purchased due to a lack of finances. They can be too easily taken on however, accumulating debt very quickly.
With a loan, consider:
- Are the repayments within budget?
- Is the amount borrowed really needed or can a cheaper car, house or course be considered?
- Is there an option to pay off the loan quicker?
- Is the loan providing finances to invest in something that is going to be financially of value in the future?
There is a lot of focus today on bigger and better items with the consumer never being happy with what they have. Be realistic with finances and consider needs rather than fleeting wants. Doing so will help to build up a healthy handling of one’s finances as well as an appreciation for financial stability. Always consider the long term and recognise the value of starting to be money wise today, no matter how old or young one is.
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