Are you familiar with the book “The Richest Man In Babylon?” If I were to ask you what you spent your salary on last month, there is a high probability that you wouldn’t be able to answer correctly.
This is because you haven’t planned your spending categories. Even if there is a small hole at the bottom of a huge ship, that ship is not safe in the water. Similarly, if you are not careful about your unnecessary expenses from now on, you may face danger in the future.
And one of the ways to get rid of unnecessary expenses is to keep a record of your monthly spending.
Today I will discuss a famous book on money management, “The Richest Man in Babylon.” The book was written by George S. Clason. Let’s get started.
Idea Number 1: Record Your Expenses
You can use the smartphone in your hand to manage the accounts. Because this smartphone is your biggest companion. There is an app called Monefy. Through this, you can easily record or enter data according to the category of your spending.
You can use any other app. It’s your choice. At the end of the month, when you see that 20% or more of your money has been spent unnecessarily on things that were not needed, then a sense of awareness will develop within you.
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Otherwise, you won’t realize how your unnecessary expenses are occurring, leaving you no time to be cautious.
Idea Number 2: Ask and Wait
If you cannot identify the unnecessary sectors of spending money, you will never be able to save money. At the same time, you’ll find it difficult to avoid overspending.In this case, one way can help you.
This is, ask and wait. Seeing flashy advertisements or lured by discounts, we often buy some products that are not actually useful to us.So, when you go to buy a product that you are confused about, you have to keep two things in mind for such products.
Before making a purchase, ask yourself, “Do I really need this product?” “Or am I buying it simply to impress others or for some other unnecessary reason?” If you realize that you don’t truly need the product, resist the urge to buy it.
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But if the answer in your mind is positive, that is, the product is needed, then let’s know about the second thing to do.The second thing to do is, “wait.” Wait at least 3 days. Then ask yourself again, “Do I really need to buy this product? “If you genuinely need the product, go ahead and buy it.
Idea Number 3: Save Money and Money Will Save You
A study shows that about 56% of people do not set up a separate fund for emergency situations. But economic pressure will come in the life of every person. This can happen if you are fired or in a medical emergency.
However, experts often advise maintaining a savings fund that can cover at least six months of living expenses.As a result, money has to be saved separately for any danger or activity.
This will act as an emergency fund so that we do not get frustrated in times of danger. This money should be kept in a separate bank account. No debit or credit cards will be linked to this account.
The fund should not be touched except in a real emergency situation. If you are also among those 56% of people, then I would say, open a new bank account and put money in that account according to your ability.
When you are going through a bad time, this money will work for you. When you can’t earn, these savings will be useful to you.
Idea Number 4: Save First and Spend Later
Most people think they should save only after paying all their monthly expenses. But Warren Buffett, one of the most successful investors in the world, advises the opposite.
He thinks that we have to save a certain amount of money first. Then the rest of the money should be spent. He also thinks that we have to pay ourselves first. Then others.
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So at least 10% of the income should be kept in the savings account and another 10% for investment. This money should be invested according to our opportunities. The remaining 80% of the money.
This money should be used to cover our monthly expenses. To manage money properly, we need to calculate our expenses for at least one month. All unnecessary expenses should be eliminated.
If you can create a list by calculating for a month, you can decide whether you can save more than 10% of your income each month. Currently, banks have a recurring deposit system.
This ensures that a fixed amount is automatically set aside in your savings account.
