If you continue to spend without any specific target of saving money, you would end up spending the entire money that you earn.
For making investments, you need to save money first. Money may be saved by spending less than what you earn. While earning may not be entirely under your control and remain fixed for a period, you may certainly control your spending to save. Less you spend, the more will be the savings and vice versa.
Mistakes in Spending
Here are some of the spending mistakes that you should avoid to save more:
1. Spending first before saving
If you continue to spend without any specific target of saving money, you would end up spending the entire money that you earn. So, renowned investment expert Warren Buffett, “Don’t save what is left after spending; spend what is left after saving.”
2. No list shopping
Unless you make a list of essential items that you need to buy, you would end up forgetting buying some of the items and wasting the excess money in buying some unnecessary items. Thus, by not doing list shopping, the chance of savings will be curtailed.
3. Increase your expenses with increase in income
As a prudent investor, you should take the opportunity of an increase in earning to increase the savings first. Otherwise, you would end up finishing the extra earning in excess expenditures only.
4. Not having a Budget
For saving money, you should chalk out a Budget to determine how much you should spend on which items out of the total earnings and how much the minimum amount you must save. Apart from the compulsory spending on essential items, you may make some provision for some spending on entertainment also by making a Budget.
5. Not involving your partner in money matters
To keep the spending within the earning limit after a provision for saving, you must take your spouse in confidence by explaining the need of saving and the capacity of spending to avoid the demand of unnecessary spending on luxury and entertainment.