How to handle your spending
I have been having the same problem since I moved out. Every year I have the same spending and every year I “complain” that I have it. A couple of years ago, I noticed that not only I have problems with fixed costs. A lot of my friends and coworkers complain that they have car insurance to pay in this month, in July they have to pay for a holiday, in December they must buy Christmas gifts. Some of them must change tires in their cars and some have a wedding anniversary. All these things are associated with money. Unfortunately, a majority of us might have a problem with paying a big amount at one time. To be honest, I am also not happy when I have to commit the lion’s share of my salary for new car insurance for example. In December 2020 I said: “Enough! I have to put an end to my suffering!”. My financial revolution began.
Debts
First of all, we have to start with our debts. All of them should be paid off, except for the mortgage because it is impossible to repay it in a short time. How can you pay back all debts? It is an issue for another essay, by the way, I should have started about debts instead of spending.
Secondly, all our spending should be written down. I mean all uncommon expenses which are paid once per year. This task is significant for our next steps. We must think over how much we need for holiday, how much we will spend on Christmas gifts etc. Additionally, I recommend writing down how much we want to just save every month. Furthermore, if we have enough money, we should open a retirement account and put some money there every month. I do not believe we will get a pension, hence my advice.
Set goals
The next step is associated with our bank account. For example, ING offers a reliable saving system. We can just add a goal in a saving account and make a standing order. If you can do this in your bank, just add all goals and standing orders.
In this point, I would like to describe it by using my own example. In a table, I wrote my spending, how much I pay for it per year and how much I will pay when expenses will be divided by 12 (months).
I believe that an amount up to 25 $ per month has a crucial value. In fact, we don’t feel when we commit, for example, 7 $ per month for MS Office subscription. Additionally, if we have standing orders, this small amount will not be noticed by us. 7 $ is like one cup of coffee in Starbucks (if you drink coffee). On the other hand, when the time for paying is coming, you will be satisfied that you have the whole amount, and you needn’t add money from your salary.
Savings first
Last but not least, if you put a part of your salary into a saving account just after payday, you have to live on the remaining money. When you have less, you spend less, this is the rule of thumb. Of course, we cannot commit most of our salary, in that way, we will not have two pennies to rub together. It is not the point. We should have enough money for life at a satisfying level.
