Whats the most basic way to increase your net worth? Whats the trick to ensure a growing bank balance?
Its a very simple principle. Always make sure you spend less than what you earn. What remains after this has no where to go but into your net worth!! As long as you follow this diligently, you will secure a safe future.
Budgeting is a necessary skill in today's world. One needs to monitor his/her family's cash flow and plan accordingly. It is important to plan how much you will spend on all categories of your expenses and then track how you are progressing towards it.Make cutbacks when you are overspending on a category.
ex: If you realize that you are spending a lot on eating out, then brown bag your lunch for the remainder of the month.
Some more important advice on saving money -
It is important to control the need for instant gratification. Most people today have developed tendencies such that they can feel happy only if they are spending a lot of money. Ever heard of shopping therapy? Unfortunately such tendencies, if unchecked, can destroy your budgets. They may bring a lot of pleasure and happiness in the moment but over time they ruin your financial future.It is actually not true that you need to spend to feel happy. There are many productive and cheaper ways to make yourself feel better - charity work, writing, reading, hobbies, cooking, exercise etc.
At the same time, it does not mean you need to live frugally. Meet all your necessities always. Spend a little extra once in a while to feel mentally and spiritually wealthy. Enjoy a movie with your family. Eat out a few times a month. Spend some money to help the needy. Do all these as long as you remember our basic principle - Spend less than what you earn. Also always aim to increase the gap between these two - income and expenditure.
Another important thing is to stop comparing yourself with others. Your neighbor may be driving an expensive SUV. Your childhood friend may be travelling to different exotic places in the world. They may be doing it as they earn enough to live that way. Or they may be doing it by getting into debt. It does not matter. You need to think what is best for you and your family. If you can afford it, then do it. Don't do it just because your friends did it. This is very important to prevent debt and ensure your savings stick around for the future.
Keep these things in mind and you will be on your way to financial security! Remember, your commitment to the end goal is your biggest strength in any battle.