A wealth building tool that’s simpler than you might think
How much did you earn last month? Easy question; you can answer it in a jiffy. How much did you spend last month? Now it gets tricky. And what did you spend it on? Impossible to answer!
Experts estimate that 90% of the people do not know how much and where they spend. This leads to a blind spot that may look harmless but is responsible for most of our problems – snowballing credit-card debt, family fights, daily stress and anxiety about the future.
Luckily, behavioural experts have suggested a very simple tool to overcome this blind spot. You may recollect that your grandparents or parents used this tool as a matter of habit. This simple tool is just keeping a record book of your daily expenses. It does not require any fancy software or app; a simple notebook will do the trick.
Budgeting is not about denying yourself; it’s about saving enough to make the things that really matter possible
Identify wasteful expenditure with a daily budget record
The solution is easier than you think: take a couple of minutes before going to bed to jot down all the expenses incurred during the day. Do this every day, without fail.
Behavioural experts believe that this will lead to the following benefits:
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Identify wasteful expenditure: Credit cards and mobile wallets have made it so easy to pay that we spend mindlessly. You could spend money while walking across the road, working at your desk, lying down on your bed or sometimes when you are just feeling bored. By writing down every expense, you will soon see patterns and quickly identify avoidable expenses. You do not have to deprive yourself, but small luxuries can be eliminated.
A coffee every day from a café (rather than from the pantry at work) and ordering lunch (instead of making and carrying your own) can help to save up to AED 30,000 per annum. Put together with cigarettes, drinks, parties, gifts, online shopping and so on, you are now talking about serious money.
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Cut down impulsive spending: Since you have to remember and write down expenses every evening, your mind will become more conscious while spending. From thinking – “What a smart shoe, I’ll take it” you will probably pause and ask – “I have many shoes, do I really need another pair?”
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Experience stress-free living: Most of the times we avoid thinking about money because it makes us uncomfortable. Thinking about bills to be paid, credit cards outstanding, upcoming expenses and a financially secure future is stressful. But this is like burying our head in the sand. When we start spending consciously and start saving, we feel more in control. When we start taking decisions to save in the present, our worries about the future start reducing.
These are definitely a lot of benefits from a humble tool that can make you seriously wealthy.
