Are you just like me wondering every month where your money went? At the end of every month I can see that we run a profitable business and made ourselves a decent income. Also, at the end of every month that same income is all gone. Where friends can afford holidays, nice cars and dinners at expensive restaurants from a lot smaller income, we feel that we cannot afford any of these luxuries. I wondered if it is mismanagement of our money, or just a difference in priorities.
This inspired me to read more about organizing finances. I found a few useful tips and applied them to my situation. Follow me and see what I have learned.
- Keep an overview of your finances. Write down all income and expenses. This overview can be used to see where you can save money.
I started with writing down all our expenses, from the electricity bill to an ice cream at the mall. I figured that on a daily basis there were only few things that I could save on, like the ice cream at the mall, but that it would not make a big difference at the end of the month if we saved that money. - Think about the future. Knowing what you can afford today is not going to help you in the future. The economical crisis proves very well that people do not keep in mind that unexpected things can and will happen.
Here I agree that we are a little on the save side with always thinking that we cannot afford anything. I see people around who buy all the latest gadgets on financing; a new mobile phone, an iPod, a laptop, etc. Why buy it if you cannot afford it? That said, I have to admit that we now have a car on financing. Not a brand new one, though. It’s 13 years old. - Pay bills immediately. When you postpone payments of your bills and credit card, interest will be added, which will lead to even bigger bills.
When decluttering the house a few months ago, I got myself a corkboard and pin all the incoming bills on it. I used to miss a few bills every now and then, always causing extra costs. Now, every bill is paid before its due date. - Save on utilities. Perhaps this should be a whole new post, since there are so many ways to save on utilities.
And since this is something I’m not very good at. I know where I could save, but I feel that I finally can afford to use air conditioning at night, a hot shower in the morning and laundry done in a machine. It is all about priorities and for a long time we did without these luxuries, but making a little extra money should go towards a better life standard in my opinion. And a better life standard does cost more electricity. I try not to leave any appliances switched on unnecessarily though. - Do not try to save money by scrimping on insurances. Paying the premium may look like throwing away money without getting anything tangible back, but you will be glad that you did pay when an accident happens.
I had to learn this lesson twice. Once we thought we could live without health insurance, but later had to learn the hard way that a single night in the hospital was three times the amount of the premium. And recently we spent an amount of nine years insurance premium on taking a large dent from the car.
Fred Allen
Willie Nelson
From these five tips I already learned that my priorities are indeed different than those of friends around. I prefer to have a better standard of living with an air conditioned bedroom and a hot shower over a Smart Phone anytime. I guess this is a cultural difference. Being a European living in Asia, I often find that I care more for my facilities and delicatessens where others show off their cars, clothes and gadgets.
I also found that we do spend money in places where we could save it. Our latest stint with the car really did cost us a fortune that we did not possess. It was a hard decision for us to get the car on finance, while we normally only buy things that we feel that we can afford. But then getting a huge dent in it was part of the unplanned and unexpected expenses that thought us an important lesson.
Last, I found that I have to work on better marketing for this blog and come with a good monetizing plan, because a little extra money is very welcome if I ever want to be able to afford a nice holiday, an interesting gadget to show off, or be able to live without worries over the financial side of unexpected sicknesses and accidents.
