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Do you think you overspend? Well, this article is perfect for you! Here, we will learn some tips on how to save money and have control over your personal expenses. It is important to have a financial habit on your domestic economy to be aware of the activities you do that make you waste your money.
Another important thing you could learn here is notions on financial education. You should know what debts work and what they are all about. So, if you want to improve on your savings and
have more knowledge on financial aspects
, and avoid overspending… keep reading!
Debts, something people are afraid of
First of all we should know what a debt is. Have you ever borrowed some money from a friend and you promised him you would pay him back? Well, in case you never did pay him back, you have a debt with your friend. It happens the same with companies, stores and even the government, so you’d better be careful!
Another important thing about debts is the interest rate. This is when you ask for a bank loan and you don’t give back the amount you asked for, here you will have to pay an interest rate too. This is similar to a fee you pay for making use of a bank’s money. So, depending on the percentage of interest rate you have, you will pay more or less. For example, if your bank loan is $1,000 with a 10% interest rate, you will have to pay $1,100 back.
The ‘$1 rule’ or how not to overspend and save without feeling guilty
From this point we’ll talk about what everybody likes, saving money! Sometimes when we try to have a financial habit and try to improve our savings, there’s a part of us that feels bad because it seems we are not using our money wisely. This will change from now on.
Next time you go shopping you won’t overspend, try to use the
‘$1 rule’
. This rule will help you with your personal expenses, because you just need to think that you can only buy what costs $1 or less per time you will use that thing. Let’s see it clearer with an example, you want to buy a dress that costs $20 and you will use it 20 times, in the end it will cost you $1 per time you use it. However, if a shirt costs $50 and you will use it just once, it will cost you $50 per use.
So, you should analyse if what you want to buy will give it a use or not. Think about the dress, that would be a great purchase! If you achive this, you are a step further from overspending.
Is there room for hobbies?
Of course! You need to have hobbies, we shouldn’t associate saving money with the lack of activities that make us happy.
You need to make a list of the hobbies you would like to do (travelling, buying clothes, etc) and use the ‘$1 rule’ for the rest of the purchases, so that you can use all the money saved on your hobbies. You won’t feel guilty anymore for saving because you will be doing it in a proper way.
These tips will be very useful to avoid overspending and start organising your personal expenses and asking yourself questions like ‘do I really need it?’ or ‘how many times I’m going to use this?’ everytime you go shopping. I know it’s very difficult to start a new habit and get used to changes, but it will be so worth it that you won’t regret it. When is the perfect time to start? Now! There’s no time to waste nor even money to overspend.
