Jan 16 2010

Watch What You Spend On

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We often hear the expression: “Live within your means.” Nowadays, we need to change this expression by substituting “within” to “below.”

If we work for somebody or for a corporation, we need to set aside some savings which we can use for a “rainy day.” There can never be enough savings. That is why we sometimes find a second job. And this is the reason why we want to improve our lives financially, by getting off the “rat race” and creating wealth.

At times, we have the uncontrollable habit of buying things we don’t really need, especially when items are “on sale.” We stock up on things that are “on sale” thinking that we are saving. At first thought, it seems we are, but on second thought, we are actually losing. Foodstuffs get spoiled. Clothes go out of fashion. Appliances’ warranties expire even before they are used. Sometimes, they get damaged because they have been stored for too long. And new models are introduced which makes what you have on hand, obsolete or phased out. This might probably be the reason why they are “on sale.” If you notice, most electronic appliances are expensive the first time they are introduced and they become cheaper in time.

We stock up on things thinking that a similar opportunity might not come our way the next time. However some products are excessively produced on purpose, to be put up “on sale” if not completely sold while regularly priced. To some producers, it’s cheaper to sell at cost or minimum profit than to keep under storage, not to mention expiration dates. This is one way to push a product. You see, when people know that a certain product sometimes goes “on sale,” they always have the product on mind. It’s free advertisement at its best. The product makers don’t lose money anyway. On the contrary, they make money.

All too often, even the rich people fall prey to this kind of promotion. The poor and middle class would say: “I might as well spend my savings on these items since little savings are not going to make me rich anyway.”

And you know what happens to your house if you keep on stocking up? You turn your house into a warehouse. There will be clutter everywhere, especially when your house isn’t big enough. You only buy things ‘on sale’ if you intend to sell them for a profit and not for your own future use. Keeping a reasonable quantity is justifiable.

Be prudent. This is a habit that we seriously need to consider improving on or rectifying. If you are making enough or more than enough, keep in mind that it is not how much you make that can make you wealthy. It is how much you spend and how much you keep. Some of us have the habit of purchasing luxuries the moment we have the money or credit line for it. Most rich people, in spite of being rich, buy luxuries last. With the money you keep, books are some of the best investments. They keep you skillful. They open up new horizons which can lead to wealth creation. The same thing is true with seminars, tapes, and other media related to acquiring financial knowledge.

Therefore, prioritize your purchases. Don’t blow your money away unecessarily on a buying binge. You’ll see that at the end of the day, you’d actually have some leftover to carry you over the next month.

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