Family wealth management – A difficult part of budgeting is cutting back on discretionary spending.
Many people wish they had more personal savings. There are two basic ways to build personal savings:
Save money already coming in.
Make more money.
How to Save Money by Curbing Spending: Learn to Stop Spending Money Unnecessarily
One way to save money that is already coming in via a paycheck or investments is to curb spending. According to family wealth management, spending too much money drains disposable income, depletes savings, and limits a person’s ability to invest money.
Cutting back on spending is not an easy feat. The urge to spend money is a habit learned over time; logically, it follows that learning to save money is a habit that must be practiced. Furthermore, anyone who is used to spending freely because there has never been a need or urge to cut back on spending and save money may find it difficult to suddenly stop spending money.
One way to combat spending too much money on family wealth management is to adopt an objective way to evaluate potential purchases. Removing emotion from the decision will automatically decrease spending for most people.
Spend Too Much Money? Consider These Questions Before Making a Purchase
To make the purchasing decision a logical one instead of an emotional one, consider implementing a check in the system in the form of a question that forces objective evaluation of the situation. According to family wealth management, choose one or two questions that make the most sense and consider one or both of them before making any purchase; these questions have a way of making personal goals surprisingly clear. Below are some questions to ask before making the decision to spend money.
Was this item needed yesterday? If it is an impulse buy, the answer is almost always no.
Does it fit within the household budget? This is an easy one. Simply don’t exceed monthly budget limits without good reason.
Will the purchase cause regret next month?
Is the money better used or saved for something else?
Does this expenditure align with personal goals and values? This question is often posed in Your Money or Your Life, a personal finance book on frugal living and early retirement.
What if the questions above result in a reason to spend money? Then consider shopping around to get the best deal on that purchase.
Fewer things hinder savings than unnecessary expenditures. Those interested in building personal savings can use the mottos above to keep spending at bay and use the difference to fund personal savings accounts.
Family Wealth Management and Frugal Living Advice
Financial life planning based on frugal living and reducing household costs is highly advantageous, especially during the current credit crunch. It could mean that credit card debt can be reduced or even that the money saved can be invested in a tax-free cash ISA or stocks and shares ISA.
Reduce Household Costs by Switching from Sky TV to Freeview
Whilst paying for a TV license is compulsory, a great way to save money is canceling that additional Sky TV subscription and opting for Freeview. Freeview has many TV and radio channels available. This simple financial life planning will reduce household costs by up to £600 per annum.
Cut Living Costs with the Rent-a-Room Scheme
A family wealth management expert says, by 2025, the percentage of men living alone over the age of 60 is expected to be about 30%. The government now offers home-owners the chance to deal with this cost of living increase. The rent-a-room scheme permits someone to make a tax-free income of up to £4,250 per annum.
Financial Life Planning and Property Size
How many couples continue to live in a 3 or 4 bedroom house after their children have left? A part of financial life planning is recognizing unnecessary expenses. A money-saving tip is to sell-up and buys a smaller house. This will reduce utility bills, council tax, and mean that the additional cash can generate a further source of income.
Use ‘Salary Sacrifice’ to Pay Less Taxation
A salary sacrifice scheme involves an employee foregoing some of their salaries to provide a non-cash benefit. Examples include pension contributions, childcare and the cycle-to-work scheme. Salary sacrifice means a lower monthly wage, but the benefit from lower taxation helps with financial life planning.
Beat the Credit Crunch and Buy Cheap Designer Clothes
Designer clothing isn’t normally associated with financial life planning. However, a great money-saving tip is to purchase last season’s designer clothes from TK Maxx – TJ Maxx in the US – and Bicester Village at up to 70% discount. Designer clothes will last longer and can even be less expensive than generic brands.
Tax-Free Savings and financial life planning
The government offers investors a number of tax breaks, including Individual Savings Accounts (ISA), National Savings products and personal pension plans. Tax-free savings help with financial life planning, especially for higher-rate taxpayers. Why pay tax when it isn’t always necessary to do so?
Frugal living is a great way to save money and cut living costs. Using the above money-saving tips can help to counteract the cost of living increases. This leaves more money available to reduce credit card debt and save for retirement.