Most people have no clue how to adjust their standard of living according to how much they earn. Payday loan provider Wonga SA has recently released data which suggests that many South Africans have little to no control over their financial situation. A bit of insight into how you use your money is therefore absolutely necessary.
We are all guilty of misusing money regardless of how much is earned. The purpose of this article is to help you make pertinent decisions regarding how you spend your money so that you can build rather than squander your wealth.
The first mistake which many people hardly take seriously is buying clothes which you don't end up wearing. Among many things which we have absolutely no use for, clothes which stay in our wardrobes for years even though we never put them on, is probably the worst way you can waste money. The problem comes from enjoying the thrill of buying designer labels and fancy garments. The way around this is to focus on quality every time you need to buy clothing items. This makes perfect sense when selecting clothing for everyday use and going to work. And make sure these are garments you know you will use frequently. Choose something you like but will wear over a long duration. The quality will ensure these clothes last if you look after them.
Another mistake which is so common these days is too many people think just because their earnings are able to cover their expenses they don't need a budget. Living without a budget plan is financially dangerous, to say the least. Only when you can balance your income accurately to the actual costs of living will you be able to determine your financial worth. So make it a point to do all the much-needed calculations you have been neglecting up to this point. Also, don't make the mistake of not recording your spending no matter how small or trivial it may seem. Budgeting works but only when it is taken seriously.
Living beyond one's means is another mistake we make with money. It also begins by not having a clear picture of how much money is coming in the first place. You place yourself at great risk when you do not allow for vital expenses. Even a decent salary has to be viewed with a pinch of salt by calculating every possible financial dent brought about by living expenses. Here too budgeting will help you to tighten your grip on your finances. Most importantly though make the decision to start saving more and spending less.
Credit cards pose a serious problem and it's time to admit they're harming your financial situation. The harsh truth is that most people who use credit cards do so for all the wrong reasons. Herein lays the problem of losing more money to credit than taking any real benefit. The solution is to eliminate the need for credit cards altogether. Resolve to quickly pay up credit card balances you owing, and then finally deal them the scissor treatment they deserve.
Once you take back bigger portions of your income you can seriously consider proper saving plans and investments to take your finances to a whole new level. This is the long term ideal and the reward is financial freedom and independence.