Regardless of good you are at saving money, spending is always much easier, and a lifetime of effort can be undone with just a few bad decisions. This is why it is so important to not just learn how you can save more efficiently but also learn how you can keep a close eye on your spending and decide between important purchases and bad decisions.
This is where the importance of budgeting also comes into play. Making a balanced budget where expenses are kept under control and in no case exceed or even come close to your income is a vital step in obtaining financial independence and all the benefits that come with it.
As with most things when it comes to personal finance, you will realize that small decisions can have a huge impact on your overall budget. This is both a good thing and a bad one. It is bad as the brand name cup of coffee or the pastry you don’t really need but you but each day adds up to a lot over the course of a month or a year. It is also a good thing as you won’t have to make huge life changes in order to start saving a lot more money.
Budgeting should of course take into account current needs and should not put saving money over basic necessities or quality of life issues. This being said, you can start by having a good look at what you are spending your money on. Try making a daily list of everything you buy, from bubble gum to furniture and everything in between. Do this for a month or more. Then look over the list and see what you feel is unnecessary. Try to add up things you can replace for much cheaper substitutes. A lot of personal finance tools give the “coffee example” as most people can drink free coffee at their work place or very cheap coffee at home when compared to what you would normally buy from coffee shops. Add the total cost of items you can let go without it affecting your quality of life and you will probably find that you were spending a significant percentage of your total income on unimportant things.
You can either choose to save the extra money or spend it on things that actually help you live a better, more fulfilling life. This includes better quality food, better clothing or an that vacation you’ve been wanting to go on.