Money-Affair

One of the qualities of the rich is being prudent (not selfish, not stingy)

They are not spendthrift, and they know how to manage their money well.

At a near age of 30, I am now self-employed after holding 2 jobs for almost 8 years. My parents developed saving habit from when I was as young as 5. My dad opened my first bank account for me at the age of 9. I was ecstatic because, now I can save all the money I received during festive seasons at the bank and can see my money grow.

Because of my prudent nature that was nurtured early, I was always conscious about spending. I have to admit, I do spend beyond my budget but never to the extend of owing people (or organizations) money. At this near age of 30, I don't own a credit card.

Hard to believe, but it's true. I have 3 bank accounts and no credit card. Bank account (A) used to credit my salary and pay my bills, groceries and other items, bank account (B) is used to maintain my investment, and bank account (C) is where I keep all my liquid cash for emergency.

Why the need to keep my money separate? It's easier to track, and it's easier to track my spending from account (A). I only occasionally use account (B) and rarely look at account (C) - I don't like to see how much I have saved because I will have a lot of temptation to spend it.

So taking away these 2 accounts, how does this allow me to manage my spending from account (A)? Now that this is the focus, I will be able to track my monthly expenses easily without frills. When I look at my monthly statement, I know what I spend on and I will be able to estimate my expenditure for the following months.

Also, I will also be able study my expenses and then cut down on unnecessary expenditure.

I have this habit of paying myself first - a concept that will be very useful to an individual if practiced well. So, monthly, after taking away all my necessary expenses, the balance I will deposit into the savings account. Monthly, I will probably leave myself with approximately $400 to spend on food and transport and occasional entertainment.

See, if it's already a habit, it's not difficult to do. It's only a matter of getting used to spending lesser on things that you don't need and redirecting the funds into something that is more useful.

Of cos I will reward myself once in a while with something nice, like good food or a new pair of shoes, but I will make sure to save up an amount separate from the amount that I saved. With this method, you will find creative ways to save money, to survive on just $400. It's really possible!

How? Well, eat at home instead of at restaurants. Rent a DVD instead of going to the cinema. Shop during a sale instead of a non-sale period. There are also many other benefits for doing the above - if you're home more often, you get to spend more time with your family members (or housemates, if you are not living with family) and you get to develop a good relationship with them, and this is something that money cannot buy.

Also, because I do not own a credit card, I have no power to purchase on impulse, and I'm able to keep myself debt free.

If you don't remember any of the things above, at least remember this:
1. It's not wrong to spend but spend on things that you need.
2. Always pay in cash because the interest you rake up from the credit card charges will eventually kill your pockets.
3. Pay yourself first.

Make small changes in your life, develop them into a habit and then see how your life change.

Remember, the change starts with you.