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If you’re ready to start saving your money and building wealth, then you need to change your mindset about how you handle money.
We’ve talked about the importance of creating a budget and some of the budgeting methods we can use. This episode, we’ll talk about some of the thoughts we have about money and how we can change them for the better.
Know the difference between a want and a need.
Sometimes something you really want can be staring you in the face at the store, and you may feel like you need it right now, but do you really? Will that item benefit your life or make a task easier?
Any money spent on a want is money that truthfully doesn’t need to be spent at all, but we’re human and desire gratification. If you really want something, then there are a few things you can do to obtain an item much easier and have it be less stressful on your wallet and your savings goals.
- Stay away from brand name items. Think about what you’re buying. This can be at a department store or the grocery store. Brand name items, for the most part, are generally overrated and overpriced. I’m not saying to buy low quality, I’m saying to not allow the name of some multimillion dollar company dictate what you buy. This can mean shopping second hand for clothing or furniture, since a consignment shop or thrift store won’t have the ridiculous department store prices. Shopping at outlet stores for clothing or household items can also be less financially stressful. When grocery shopping, picking store brand items over brand name items can help minimize your food budget.
- Know what you can afford. Just because you have just enough money in your bank account to buy that latest video game doesn’t mean you need to buy it. There are two sayings I like to think of when changing my mindset about money. First is, “Just because you can, doesn’t mean you should.” Just because you can afford that $100 item because you have $110 in your bank account, doesn’t mean you should spend all your money on it. The second saying is, “If you can’t buy 10, then you can’t buy 1.” If you can’t afford 10 of the latest hit video game console, then you probably shouldn’t buy one until you can. This doesn’t mean don’t buy food when you’re running low on money, necessities are different.
- Patience is key in all journeys. It sucks, but you don’t need the latest iPhone on launch day. Delaying gratification can do wonders for your budget. If you can survive without ever buying a specific item that you don’t need, then great. If you really must have the latest toy or hot item, then I highly suggest to budget for your wants. There are a few ways we can approach this – we discussed them in the last episode. There were the percentage budgets, envelope budgets and the zero based budget that you can choose from.
- A quick reminder when budgeting for wants:
- Assign a percentage of your income to wants
- Set aside an envelope with $10 every month until you reach your goal
- Add a category to your zero based budget to allocate money every month until you reach your goal.
- A quick reminder when budgeting for wants:
You will be able to buy your wants guilt-free, knowing you have the money set aside while you’re still putting money towards your savings goals.