Being financially literal is an important skill that can be acquired by anyone. However, rarely do people know the difference between a need and a want.
You should clearly know how much money you make. Moreover, you should be aware of your expenditures. You should also know where your dollars go since it often seems they move out of your pocket into nowhere. So, controlling your expenditures is the basic knowledge on your way to financial frugality.
Most people try to live within their means, which is actually a good beginning. Another level for getting frugal is living below your means. As soon as you learn to be comfortable under such specific conditions, the magic things start happening around you. Your first savings will make it easier to collect a bigger sum which you can later invest into something meaningful. What you learn from this point is that running a surplus is number one task for you to become financially successful.
The border between these two notions might seem quite invisible, but still it exists. While spending does not bring any income in the future, investment is the outlay of money with the long-term benefit, such as the ability to pay for professional training, studying or buy shares. Of course, we cannot eliminate spending at all, but it is possible to reduce it.
I am buying the cheapest stuff, so I am frugal! This is a wrong formulation, guys! Frugality is about analyzing the value of products and services. Quality is almost always over the price, because jeans that you buy for $30 can wear off in just one season. However, choosing to buy $100 jeans that will serve you for a couple of years is a better deal, don’t you think?
Try to avoid debts and stay away from using your credit card. Remember that credit can take away too much money due to interests and banking charges. So, try not to get bound by banks and lose your financial independence.
There is a distinct division between the two notions and each frugal person knows the difference. The needs of a human being are simple: shelter, food, health, etc. Meanwhile, human wants are much more complicated, such as smartphone-controlled lighting – do you really need to spend tons of your money on that? No… So be careful when dealing with your expenditure plans and consider carefully if a thing you want to purchase is your need or just a TV ad-driven want.Published: September 9, 2016