Reducing Spending

While having a  budget and carefully budgeting can make sure that you do not spend more than the  money you have available, it does not keep your spending to a minimum and help you to save money. If you can come to see saving money as a challenge, then you will get more satisfaction from saving money than from spending it. When you save up to buy something you really need and then buy at a good price you will feel good about achieving your goal. You will also avoid the costs, problems and pressures of being in debt. Savings can also be used to help you through a difficult time when unexpected costs arise.

Have you ever wondered why it is that some people have a constant struggle to make ends meet while others in similar circumstances are able to get along without any great money problems? The reason for this is really quite simple. Those who only buy what they really need at the best possible price know how to save money and use these savings to make further savings when opportunities arise. By this means they gradually improve their situation in life. 

Most people who have problems managing money think that they are doing everything possible to save money but this is rarely the case. There are almost always some ways in which spending can be reduced without making life unbearable. If you find that you are always short of money you can overcome this problem by changing the way you make spending decisions. By doing this you will also avoid the stresses, strains, conflicts and embarrassments resulting from lack of money.

Research has shown that money problems cause more trouble in relationships than anything else. If you can agree on how to control your spending you will have a satisfying goal to work towards and a happier life.

Why do people spend money?

• To ensure that they have the basic necessities of life.
• To enjoy themselves
• To impress others
• To keep up with others
• To try and win more money
• To give themselves a lift
• To avoid saying no to a salesperson

Those who have a limited income or who have a savings target to achieve, need to try and restrict their spending to basic necessities with treats only on special occasions.

Questions to ask

The fact that you see something you would like to buy and that you have the money or credit to allow you to acquire it, is not a good enough reason for making a purchase. Before deciding to buy you must ask yourself the following questions:

1. Do I really need it or can I get by without it? Many of the things we buy are not essential and we could easily make do without them.
2. If I really need it, what is the best brand to buy? You need to take into account factors such as price, quality, reliability, guarantee and ease of use.
3. What is the most economical way of buying it? Check prices at different retailers and try waiting for a sale. If possible, buy second-hand and get a big discount on new prices. It may be possible to make what you want or adapt something you already own.
4. Are the benefits to be gained worth the costs involved? Costs can include the following:
   1. The annual cost of ownership being the purchase price divided by the expected life of the item.
   2. The annual interest income given up by buying the item.
   3. Running costs and repairs.

   If you always ask these four questions you will save a lot of money.  These are the questions that people who have gone from being poor to being wealthy always ask themselves.