PERSONAL FINANCE 15: SAVING by SPENDING 3
Many wage earners have a very difficult time controlling Expenses which actually grow more rapidly than the increases their employers are willing to give. Thus, very little cash surplus (or worse, no cash surplus at all) is generated.
The best way to control Expenses and actually SAVE some amount is to spend money on an Asset that you really want and can pay for in installments.
Because the Asset is something you really want and you do not want to lose the Asset, you will actually control your Expenses so you can meet the payments.
At the end of the installment period, and because all during this period you have controlled your Expenses at a level where you can make the payments, you will find that you actually have surplus cash, i.e., the amount you have been allocating for the installment payments.
The net effect will be as if you have been given an increase in pay, i.e., the amount you have been allocating for the installment payments.
At this point, look for another Asset you really want and would hate to lose. And, use the surplus cash to purchase, the Asset again on installment.
If you do not do this, you will go back to your old ways of spending all your salary in Expenses which grow more rapidly than the increases in your pay and which you have not been able to control.
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POSTED IN: Accounting for NonAccountants, Best Business Practices, Expenses, Personal / Household Finance, Saving by Spending
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