Daily Spends – A Diary of Spending Habits

What I spend, when and where?

The Long Term Impacts Of Saving

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It’s pretty obvious that in the short term, saving money rather than spending it is going to benefit us financially, but what about other, more long term impacts of saving? It seems like more and more emphasis is being put on spending money, and ever since the 1980s where excess and spending really came to the fore, this has been the case. These days though, things are a little different, and affluence is not quite so wide spread or common place for most of us. So the impacts of our old spending habits are proving more and more important to break.

Saving with John and Lee

It’s always good to talk in terms of examples when looking into a concept or explaining an idea, so let’s run with one here. John and Lee have two kids, Rick and Sally. John works a regular job where he receives an average wage, and Lee is looking to start looking for online jobs after having been at home with the kids up until now. The couple have a mortgage, a few credit cards and store cards, as well as a personal loan and car loan. Nothing too special in terms of their circumstances here, and something you would be likely to find in your neighbourhood.

If Lee and John manage to save a little money by reducing their spending habits (which often takes but a little adjustment here and there), their family finances can look a lot different. There are unnecessary excesses in all our lives, and if we are honest with ourselves we will be able to name them pretty quickly. These excesses may involve occasional shopping sprees, regular spending on things like cigarettes and alcohol, entertainment or leisure activities that we really do not need to partake in – whoever you are, whatever your lifestyle, there are things that you do not need to be spending your money on.

Turn your spending into saving

By turning that spending to saving, you are having a marked impact on your finances and your life. Let’s return to our example. By reducing their spending by just $100 a month and instead turning that money towards reducing their levels of debt, John and Lee are choosing more than just financial savings. By paying the extra off their credit card, they are saving a bunch of interest. If they continue until one of the cards is repaid, and then snowball the minimum credit card repayment and the $100 towards paying off the next debt, they will be surprised at how quickly their debt is looking lighter – all from such a little sacrifice.

The long term impacts of reducing their spending and therefore their levels of debt is enormous. Not only do they save money, but their family life will improve as they no longer struggle under the burden of owing money here and there – in effect limiting their lives. The kids will be able to learn valuable lessons in regards to debt and saving money and have positive financial role models for managing their own personal finances as their grow older. If the family is able to start saving money and putting their money to work for them, then the possibilities really are endless – and all it takes is a simple mind shift, a decision really, and then to follow it up with concrete action.

Written by dailyspends

July 12, 2011 at 10:03 am

Posted in money

Tagged with , , , ,

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