Every dollar save is a dollar earn (Part 1)

I very much love this quote because it is absolutely true. Saving is a powerful tool that can help you harness all your potential to create wealth. It is very important to do some budgeting and limit your spending to your necessary means or earning capacity. What is the point of earning 10k when you spend 11k? To simply put, spend within your means and save as much as possible. 

I normally advice people who have poor discipline in saving to set aside an amount (be it through automatic bank transferring of a part of your salary to a saving account or other ways). I have one friend who has an obsession of splurging away his money whenever he sees money in his bank. He came out with a brilliant idea of saving his money by withdrawing out his money and putting them physically into a biscuit container. I honestly don’t know how it works but indeed it has helped him curb his spending habit and not touch his money in the container at all.  What a cute little logic. So I believe each and everyone have a special technique of saving and it doesn’t matter how one does it, as long as one is able to save, it’s definitely a baby step to further wealth accumulation.

As for me, I am definitely a saver and not a spender. Don’t get me wrong, I am not a miser but I am just wise and conscious in my spending. I am glad I know myself well enough when to spend and when to say no. One of reason could be my family upbringing who advocates on saving. Here are some tips I exercised on and I will share with you.

Keep track of your expenditure through the use of budgeting apps

I consistently keep track of my expense and cash inflow/outflow. I use this app called piggy, but I got very irritated by its recent app crashes, so I guess I will look out for a better app soon. Anyway, this is a very good way to see where your money is spent on every week or month and shows you which area of expenditure you have to cut back on. Basically, I group my expenditure into 3 different headings:

·        Fixed Expense

·        Committed Expense

·        Discretionary Expense

Firstly, fixed expenses are expenditures that require to be paid in similar amount in recurring months. For example, handphone bills, insurance premium. These expenses are difficult to cut back on because they are usually drawn up according to the contract you sign.

Secondly, committed expenses are money spent on basic necessities such as food (breakfast, lunch, dinner, supper), groceries and transport etc. A red flag in this sectors show that you are indulging too much in expensive good food, having too many meals, or travelling a lot. So this area can be cut back on a little just by having cheaper and better food alternatives. A few bloggers mentioned this before; I know some people out there pamper themselves with Starbucks/Coffeebean coffee where they charge nearly 600-800% difference from Kopi-O in coffee shop. I will admit hands down that Starbucks/Coffeebean are both intelligent in their marketing and branding to lure consumers into drinking ordinary coffee at a premium. Imagine a person who cuts down drinking a $7 coffee on working days. That will calculate into $1820 yearly. That is one huge lump sum that can be saved. Besides that, many people are also spending on Gongcha/Koi which I feel are just relievers for thirst cravings. It is not only expensive but are also unhealthy drinks. Fortunately I don’t have such cravings and likings for all of these above.

              

Back to where we are, this comes to my third point, discretionary expense. This is the greatest area where you can restrain on your expenditure. The name says it all “discretionary”. These are expenses that are spent on entertainment (movie, KTV etc.), personal well-being (clothing, haircut etc.), gifts, a new computer, a new TV and the list goes on. For me, gifts are compulsory expenditure in this section (sounds ironic, yeah it does). It is especially imperative to watch out for this sector and perhaps one can limit himself to a certain budget. 

Another cause of concern is smoking. I always advise my friends around me not to smoke but to no avail. I also hope smokers reading this can cut down too. No offense, but I just have this mindset that why would one spend money just to quicken his/her death. Some of these smokers will rebut me claiming: 

1. Life is short, enjoy while it last loh!

2. Smoke or don't smoke, fate will still decide when you will die lah!

3. Aiyah, people who never smoke also die from lung cancer

4. Stress lah bro! Smoke already can perform better. 

 I admired some of their response. People have their own opinion which I do accept but I cannot bear to see them harming their own health. If all these money are spent wisely and usefully, I am very sure he/she can make themselves enjoy a healthier and better life. It will be meaningful too if these money are donated to charity. If I calculate $12 a pack for half a week. This accumulate to $1248 a year. Amazing how small money can compile into big money in just one year. You save plus you keep yourself in the pink of health. Hmm, that is killing 2 birds in 1 stone. If I can stay smoke-free without even puffing once in my whole life, I hope and I strongly advise you to stop smoking / cut down smoking. Okay, now I sounds like I am an ambassador for Health Promotion Board.

I will follow on with " Every dollar save is a dollar earn" part 2 in my next post. Do stay tune.

Cheers!
Little Boy