It is said that the difference between a rich man and a poor man is that the rich saves his money and spends what is left, but the poor spends his money and saves what is left.

In the words of Benjamin Franklyn, “A penny saved is a penny earned”. There is no doubt that a lot of people live above their means and at the end of the day incur a lot of debt.

The only way to stop stressing over your finances is to spend less than you make. Do you spend to impress others? Experts say “Live a comfortable life, not a wasteful one”. Manage your money wisely so your money does not manage you. Always live within your means.

You would be doing a great deal of good to yourself in converting your savings to wealth. The mechanism in economics is called the savings equals investment, which in turn is converted to wealth.

So many fake spenders borrow to buy good suits, shoes, cars and even pay for vacations in exquisite places, all a bid to impress others. Watch it, such people could be heading for a personal financial crisis in a bit.

Having said much about the savings-investment mechanism, the following points could help boost your savings alertness:

  • Keep track of everything you spend in a month, then compare with your monthly income. If your spending is more than your income, strike out expenses that can be eliminated or reduced.
  • Be disciplined enough to commit a particular percentage of your income as savings before you start spending your income.
  • Know what you want and what you need, do not spend recklessly on what you want, they could be deferred.

For a start, the above points would suffice in amassing some savings, we would look at the investment side in the subsequent editions.

Daniel OFOMI

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