Saving Money Really Is Easy with the Proper Perspective

It's always surprising to me to discover just how many people find it hard to save money. It comes so easily to me that sometimes it makes it difficult to tread in someone else's shoes for a moment and see the topics of saving and personal finances from their perspective.

Many of the people I meet who have trouble saving money say they would like to save, but after talking to them for a while, it often becomes apparent that they just don't have the proper perspective on saving to actually buckle down and do it. This often surprises me since many of these same people manage to force themselves to go exercise at the gym on a regular basis, practice healthy eating habits, even restrain themselves from eating meat, yet they can't seem to save money, an equally challenging, yet achievable activity.

In order to save, a change in mindset may be necessary. This change isn't always easy, but by using the proper perspective on certain money saving techniques, the transition might be made simpler.

It's Not About Income -- it's About Expenses

Sure, it's important to know how much money you make, but for some, this knowledge almost serves as a license to spend. If a person thought that he only made $30,000 a year, but really made $60,000, he would hopefully be more inclined to spend closer to $30,000. Meanwhile, if that person made $60,000, and knew that this is how much he made, he would likely be inclined to spend closer to that amount.

Of course you can't go through life not knowing how much money you make. However, saving money isn't really always about your income, it's often more about your expenses. Someone who makes $30,000 a year, but saves $10,000 is saving more money than someone who makes $100,000 and spends every dime. Therefore, knowing and being able to contain your expenses may actually be more important than how much money you make. I know people who never made what many would consider to be a huge income, but their ability to limit expenses and live within their means has made them rich.

Don't Budge From Your Budget

In order to really understand your finances and how best you can save money, I can't stress the use of a budget strongly enough. I've had a budget since college, and it has opened my eyes to a number of saving and spending truths.

Developing and fine tuning a budget can provide the proper perspective when it comes to how you use your money, where it's going, and how you can make better financial decisions. But many people come up with a budget and then don't adhere to it as they should.

Of course I understand that a budget will take time to set up and become acquainted with. It isn't something that just miraculously happens over night. It took me numerous months to begin to see patterns in my spending and have a good idea of what I spent each month. Once this pattern developed though, and I set a monthly expense goal for myself, it became pertinent to my ability to save money that I adhered as strictly as possible to that goal with any additional income going straight into savings.

Even back when I had a steady income, I had a very strict budget. For example, if my budget was $2000 for the month, it didn't matter if I made $3000 or $4000 that month in income, I did not exceed my budget. This is why I say that income doesn't matter as much as expenses when it comes to saving.

In this example, I knew how much money it took to live comfortably, and anything else just went in the bank without thinking about it. Now there were certainly hiccups along the way -- things like unexpected car repairs, doctor bills, and similar items. This meant that the following month, I would try to reduce my budget by whatever amount I exceeded it by in the previous month to make up the difference. If I was under budget for a previous month however, I did not celebrate by bumping up the following month's budget by the amount I was under.

A Raise Isn't a License to Spend

Similar to my budget, as you might expect, when I received a raise or a bonus at work, it had absolutely no effect upon how much money I spent or planned to spend for the month. The only thing that basically changed my budget each year was that I factored in a slight increase for inflation (mainly for things like gas, insurance, food -- not entertainment).

Now I'm not saying you have to be quite as stringent as I was, since I tend to take saving money to the extreme, however; I am trying to put your mind into the proper perspective to help you save. In this frame of mind, you can't think of extra money as "extra" money. Things like raises, tax returns, a bonus or whatever are simply saved money that goes in the bank as you continue to adhere to your typical lifestyle and budget.

The exception I would make to this rule of course is that you happen to hit a major lottery jackpot or fall into a hefty inheritance. Then there might be some wiggle room in the budget to play with. Otherwise, I like to stick to my guns when it comes to my money saving methodology.

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Disclaimer:

The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. For financial advice, readers should consult a licensed financial advisor. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.