When I was much younger I remember going to the store with my parents and begging them to buy this toy for me. I kept bugging them for the toy, and my parents just said no and ignored me. I remember getting home, crying, and throwing a big fit in front of my parents. In hindsight, it was a bit comical, I did all that for pieces of plastic figurines. My grandma was the only one who relented and kept telling my parents to buy it for me. My parents were the stricter bunch and just continued saying no and letting me be.
Looking back, I'm grateful that my parents didn't buy the toy for me. I think it helped set me on the path to learning how to save and spend conservatively.
Learning how to save is a very important life skill to have. It makes you prioritize your spending so you can live your retirement a little better. If retirement is a bit far off in the future, then think of the big purchases you can save for in the short term, like a new car or a new house.
Did you know that people who win millions in the lottery actually end up bankrupt a few years later? The reason for this is because winners tend to just consume all their winnings without putting a financial plan in place. It is a revealing statistic because it really shows people are not really planning ahead financially. If you want to read the article, click here.
I'm not suggesting that we should only start thinking about saving when we win millions but I want to emphasize on the importance of saving no matter what stage you are in life. So how should we start the process?
Well, it all starts with the simple mindset shift to learn how to distinguish your must haves and your nice haves in your life.
A must have is something that you need in your life, it is essential. A nice have is something that is great to have but you don't necessarily need it. If I commute to work, it may be a must have to buy a car to drive to work because taking transit takes too long. A nice have is buying an expensive sports car to drive to work. I really just need a simple car to get from point A to point B. I don't need a vehicles with all the bells and whistles. I hope you see the distinction.
Separating out the nice haves and the must haves can really save you a lot in the long run. I remember I would be in a bookstore (I love reading) and when I come across a book I love and wanted to buy, I would ask myself if I would ever read it more than once. If it is a book that I would not touch ever again after reading it, then I'm better off just borrowing it at my local library.
Let's face it, we all have unlimited wants, the ideal lifestyle would be to earn an income that can meet all our nice haves in life. But until that dream is a reality let's stick to creating the savings mindset. Do you have anything in your life that you can see is a must have or a nice have?