Friday, August 12
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To Better Grasp Our Spending Habits and How to Put an End to It

We all strive to earn a decent income of money to enjoy our life to the fullest. So it is a huge motivation for us to acquire money, but unfortunately, many of us lack the knowledge of managing it wisely. Add to that the sad reality of statistics: the majority of employed people live paycheck to paycheck not only in the U.S. Of course, but this is also a globally destructive phenomenon. But the question is, how do you handle your finances? 

Your Attitude Toward Money

What’s your attitude towards money? Can you manage to hold on to some, save some, or does it tend to slip away through your fingers? Do you frequently feel vulnerable and dissatisfied because of lacking it? What does money mean to you? Have you been drawn to buying a program that promises quick riches? But where should we start with understanding money? We should start it by awareness before we go on wanting to make more.  

What Does Money Embody

It seems, our minds cannot always grasp our finances well. Not surprisingly, when our school education completely misses out on educating us on financial matters. So what does money embody? How do you exchange the value of your work for money and why do you use it to cover costs in your lives? Money has long been used as a medium of exchange for any kind of goods and services. It is meant to help buying and selling goods, and any transaction between people. 

The Value of Money

Everything has a price in this world, and even if many times we wouldn’t approve of all prices, it is not determined by us, but by the market and what it is willing to pay for the given product or service. So why is the value of money significant? What do we like to think about it? Overly positively or as being the root of all evil? Yet, when we look at someone who acquired greater wealth, we usually question how did they make that amount of money? 

We rather come up with such negative thoughts like who did this person take advantage of, who had to lose for this person to gain, they were just lucky, and so on. But we rarely ask the only important question we really should. What value did this person create to be able to become that wealthy? If we can understand that money is nothing else than created value, then we can let go of faulty negative thoughts, that everything connected is evil. 

The Scammers’ Role

Of course, there have been plenty of scammers throughout human history, but it represents their moral standards, as opposed to the real value of money. Money is the tool to provide you with more opportunities and options. Whatever you may choose to spend your money on is in line with your moral standards. But how about those who live paycheck to paycheck or even on credit card debt? 

What’s Your Connection With Money Like

One thing is for sure. Money is going around, it tends to come to you, then at least some part of it leaves you. These are your income and expenses. You could think of it in a way of how much you produce as opposed to consuming. The positive and negative sides of your balance. You will gain income when you produce something in the form of work usually, and it will leave when you consume things, including your bills, goods, or services.

Therefore, someone’s net worth is between their income and expenses. So, let’s take a look at our consumption versus production actions. Have you considered all the money you have ever made and left you? What percentage of it do you still have available today in any form of savings or investments in assets? Where do you think this process could be out of balance or improved? There is a big probability that both of them need advancement.

Our Struggle With Consumption

But the majority of us struggle more with consumption. Certain people still manage to spend all their 6-figure annual income. This is the best indicator, why production capacities alone won’t make you successful if you have big issues with consumption. There are many great examples of these in Hollywood among the wealthy stars who went bankrupt.

Living on the Edge with Money

Our working hours could seem for many people like an endless race, where you just cannot quit or rest much, to make ends meet. Because if you do, you cannot pay your bills. It is the harsh reality of living paycheck to paycheck no matter if the reason is that you find it hard to save some part of it, and have other responsibilities, like kids, elderly parents, or anyone to support. The trouble is, an unexpected health problem can cause great financial despair.

Taking Steps To Recover Your Finances

You need to start by becoming more aware of your financial dealings if you haven’t yet done so. You can build a better relationship with money if you start listing all your expenses. Such as food, utility bills, rent, transportation, learning and going out, whatever you may spend on. This could give you a much clearer picture of your consumer habits, but many times we fall into the trap that this is hard to digest, or it can be discouraging to see your balance’s differences.

The Only Way Forward

Is taking responsibility for your consumer habits… You should ideally dedicate a book for your finances, or if you prefer jotting down your detailed expenses in an Excel sheet, that’s great too! What’s the aim of this? To help you focus on what you need to purchase, and meanwhile reduce consciously spending on the things that you don’t need so much. You have to set a target and keep sticking to how much you will spend on these things weekly or monthly.

Your Aim Should Be

To minimize your expenses to the degree which leaves you enough savings, or even a chance for investing. And if you ever decide to invest in something, you need to keep a specific amount of funds. You should strive to save at least three to six months’ worth of income. This can also come pretty useful in case of emergency. If you choose short-term rewards instead of long-term gains, you are making a mistake in today’s uncertain world. 

The Consumption Trap

Are you sure you need those pairs of shoes or the latest vest or jacket? Then think again. It is a societal habit of wrongly copying each other to look the best, and the numerous catchy marketing campaigns make sure to deceive you into spending. But you need to continuously remind yourself that this kind of consumption trap is down to nothing else than social pressure. Trying to appear as good or even better than others! And it’s a never-ending story.

A World of Credit Cards

Especially in Western societies, statistics report that the majority of people use credit cards at least at one point in their lives. But where does overly mindless spending lead? The question you should ask yourself is do you prefer to appear like you have great finances, or do you want to possess great finances? The problem with the nine to five rat race is that you keep chasing things, not realizing that you are stuck and don’t live your true ambition.  

Keeping Track of Finances is Best

Because it has proven itself over and over again. If you keep a detailed journal of all your income and expenses, that is the only way to end this rat race. Oh, and of course self-discipline! The other issue is if you have to work so much constantly to be able to afford your lifestyle that you regularly get yourself burned out, it is not a smart decision for your long-term finances. 

Earning versus Spending

What do you think is easier? Reducing your expenses and keeping more money that way is usually a lot easier than generating more income, for most people. Most people know it is best to live in a very economical way, saving or investing as early as they can. Some of them also strive to retire as early as possible. But saving as much as you can to invest works for those people with a higher salary range. 

The Path to Creating Money

You must find a problem in the market that you want to solve. People will buy from you if you create services and products to simplify their lives.

Then scaling your business, by creating offline options for instance clients can use 24/7. If you look at all the wealthy businessmen, they usually became wealthy like that. A thriving scaled business can create much value for society, and money will flow into such business for its needed. It is incomparable to a standard job.

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