Archive for September, 2010

This is what most of us often do.

We tend to be thrifty on items we deem necessary and can be thrifty on.

True, instead of constantly buying your meal from restaurants or fast foods, you can bring your own lunchbox. Instead of being at the mall every weekend to watch a movie, you could wait for the DVD version to come out and watch from the comforts of your home. That way, you will not be tempted to go elsewhere in the mall and possibly spend more than what you intended. Instead of buying sodas outside, you could settle for healthy H2O. Instead of buying that new game you’ve been wanting, try to search online for a torrent download. I know, the method is illegal but let’s face it, it happens.

Bottomline, there are ways to get what we need and want with the cheapest alternative we can find.

BUT.

With all the income saved from being thrifty, I bet that money goes somewhere else we could call “luxury”.

Remember the lunch and movie savings? I bet they go to fine dining experience every weekend. Or maybe, the money is spent on some new clothes and shoes. Or maybe, to some new gadget you’ve been eyeing upon but do not necessarily need.

Bottomline, the money saved goes elsewhere where it WILL NOT earn. This is saying goodbye to savings and investments.

True economy consists in making the income exceed the expenses.

If your clothes are in good condition, then you don’t need more to cramp your closet. You don’t need branded labels to cloth yourself. You will not die from eating plainer, if not healthier food. Mend old items if they could still be mended. Live simpler and save so that, in whatever circumstances, unless some accident happens (I hope not. Knocks on wood), there will be a margin in favor of the income. The money saved can be placed in some form of investment so it could go on accumulating, and in this way, a great turnabout can happen.

Such attitude will require training but once you get used to it there will be a great feeling of rational saving than in irrational spending.

There is a simple cure against extravagance and for mistaken economy.

1. Get a notebook. Create two columns. One notebook labeled “necessities” and the other “luxuries” or “Wants”.

2. Everyday, write down every expenditure you have.

By the end of the week (or even month, if you prefer to total everyhing at this timeframe), you WILL see that necessities take only a small portion of what most of us can earn.

According to a quote from a personality named Dr. Franklin,

“it is the eyes of others and not our own eyes which ruin us. If all the world were blind except myself I should not care for fine clothes or furniture.”

We are often driven by what society dictates is cool and necessary when in fact, we can live without the “hip” and the “new”. Trends are good but constantly following the trend can lead to an individual’s economic downfall.

Basically, each one of us have to concentrate on what is “necessary” for our existence. Being aware of this will help us achieve the concept of True Economy.