Many who struggle to save equate saving with "denial" or "not being able to buy something they need/want". Others equate saving with "spending wisely" - leaving the crucial term "wisely" completely undefined. Simply defining "wise" as the "opposite of foolish" is vacuous and not useful at all. Consider the statement "I will not spend foolishly" - who can disagree with that?
I'd like to propose some concrete guard-rails so that people can understand what "foolish/wise" mean on their own terms.
First, establish a budget and make sure that your spending stays firmly within those budgets.
Second, question each purchase to ensure that you are getting value for the money you propose to spend. The guidelines in "The Millionaire Next Door" by Thomas Stanley are great. In it, he says that whatever you choose to spend on, make sure that you are getting the best value. An example: You really enjoy flying business class - you hate flying coach (you can afford it, let's assume). Stanley's advice? Great - now find the best value business class fare. Simply put, "don't overpay."
That is easier said than done. We routinely forget to search for value and consequently don't get it because of two reasons:
- Most don't like to negotiate and/or are bad at it.
- We don't believe that any savings we get is worth the time it takes to find them. Why save $0.25 if it takes an hour to find such a deal?
Which brings me to the Warren Buffett anecdote. On a TV show a few years ago, Warren Buffett was there with his son and grandson. The host asked the usual gushing questions of one of the richest men in the world - "How much money do you have in your wallet?", "How many credit cards?", etc. Anyway, at some point in the show, the grandson, in talking about one of his projects said something like "....it cost just $5000." He then went on to say other stuff. His father said nothing. The grandfather (Warren) chimed in and said, "It's not just $5000. It's a lot of money."
My takeaway - There's no such thing as "It's just $x". Every dollar of it is super important. You have earned it by putting up with bosses who are jerks, long days, missed soccer games with your kids! Live well within the limits of what you have set. Never OVER pay for goods/services you purchase. Bring the Warren Buffett mindset to your spending habits!
Submitted November 12, 2017 at 08:38AM by arnexa http://ift.tt/2zBbcwo
