|Photo by Josh Appel on Unsplash|
Personal Finance – Budgeting
Many of us have difficulty in managing our finances.
Budgeting, of course, is essential, knowing where our money goes each month and allowing for future expenses is key to avoiding financial problems.
There is one problem that confronts most of us and that it is the subtle power of persuasion either by self or a talented salesperson.
What is the problem?
The problem is minimising the real cost. It’s been done in sales for years. For example, if you were considering purchasing an expensive camera, the salesperson will often reduce the seeming cost from the total value to a monthly or daily charge. £2000 over 24 months can be reduced to £83.33 or £2.74 a day. In our minds, £2.74 a day, less than the cost of a coffee is a bargain, even if we don’t buy a coffee day! If we did buy a coffee a day, we would at least have the option of cancelling that treat in return for the camera.
Small value items can also create a problem for us. Spending £5 on a magazine or £1 on a chocolate bar might not appear to be much. What happens though, when we add up all those small spends? 12 monthly magazines will become £60, 5 chocolate bars a week will be £260 for the year. This is the power of multiplication. When we are trying to save money, take a look at the real cost, not just the one-time purchase. How many times a week, month and years do you make those purchases?
Be Realistic & Honest
If we are to really manage our money well, we need to be realistic with what we actually need to buy and honest to admit what we don’t really need and if necessary can do without. Better still, when we view savings in the light of the power of multiplication, we can turn those £1 a day savings into many hundreds of pounds at the end of a year.
Thank you for reading this post. Please do leave a comment in the section below.