When someone asks me, “Is there anybody who does not want to spend money?” I have to say “No”. Everyone, including me and you, love to spend money. But, it is not easy to spend money recklessly as making sure to both ends meet and even to earn it is too hard. It is pretty sure that reckless use can make your money vanish into the air. Money is just like an abstract. So, how should we manage or spend money wisely? Now, we will elaborate further on how to spend money wisely, highlighting some critical points.
Spending and saving are two sides of the same coin when it comes to the word “Money”. They have always been two important things that we should take into consideration. In terms of these two things, we will categorize them into two new concepts to help us explain how to manage your finances: Save to Spend and Spend to Save or Investment.
Save to Spend
There are tons of reasons why we are trying to earn money or would like to be financially stable. Financial stability gives us a chance to have dinner in a luxurious restaurant, buy what we want, and even get a girlfriend. However, it is somewhat difficult to create your personal financial management scheme in developing countries like Myanmar with low-paid salaries and commodity prices being too high. Therefore, it can be imagined that saving money is more likely to become a priority only through the systematic use of money. Let me explain with an example. Consider that your salary is 100000 MMKs. 30 % of your salary (30000) goes into your purse or wallet to be fit into society (Assign this as “show money”). Next 20000 should be added as an extra. Another 20000 should be put aside for eating out and other personal expenses. Now, you have left just 30000. And again, 20000 must be for something important or what we call “emergency money”. Here is an important point: the last 10 % of your salary must go into your piggy bank.
As an important fact, try to break the habit of using your saved money when you do not have enough money for your personal purposes. If you do not have to use your emergency money and show money in a particular month, you will already save 60000. Another fact that should be taken into serious consideration is that emergency money should not be saved together with your targeted amount of saving money. In other words, it should not go into your piggy bank, but should be saved separately. There is also an important fact left in terms of saving money. We should always not save money in cash; because it can be lost, or has a fixed value. Therefore, it would be wise to save money in banks that return high interest and invest in digital currency. In addition to this, it would be efficient and effective if you have certain goals and reasons when you save money, for example, to buy your girlfriend an expensive engagement ring.
Spend to Save or Investment
Moving on to the second category of personal financial management, the focus is how to spend to save, or investment. Spending to save or investing in something is a concrete way for long-term, sustainable financial management. To illustrate as an example, a person who would like to start a bakery will invest or spend their money to buy food ingredients and furniture for the decoration of their shop. In such a case or when investing in a start-up business plan, we have to consider two important things: fixed cost and variable cost. Fixed cost means the amount of money you invest in buying restaurant furniture, starting from chairs, tables, and table bases to booths, glasses, and plates while variable cost includes staff salary and expenses for food ingredients. Fixed cost can hinder you from starting up a business, and variable cost is likely to become a concerning hindrance to sustaining your business.
Thanks for reading till the end. See you soon.