Sunday, March 30, 2008

How to save more money?

The dilemma of ‘Saving more’ has two inherent questions, reduce expenses or make more money. Reducing expenses means that cutting down on frivolous expenses; this could mean eating at restaurants every other night, buying clothing that is not required, or maybe just taking public transport instead of your own car everyday to work. If we look hard we will definitely find frivolous expenditure, however, we often find ourselves in situations where in reducing expenses is no more an option. If after cutting down all expenses that are ‘frivolous’, we still find ourselves living paycheck to paycheck and not saving any money, we must ask what is are we doing wrong, answer: we are not earning enough money to save but only enough to live.

Take a look at some of the developing economies, such as India, China or Brazil, you would notice that savings rate is huge with comparison to some of the developed economies. This is not to say that these people are more prudent that the rest, it is the requirement of the times. There are no social structures in place to help a family if the bread earner of the family falls sick or dies, for example, health insurances are now being introduced and not even to full extend, they form a ceiling of the medical expenses that are allowed to be paid. Hence, the family has to depend on the savings to facilitate the process. Now this is an extreme example, however, many socio-economic benefits that one takes for granted in the developed world do not exist in the developing world. However, we must learn from this, savings help these families survive turbulent times, if they have lost their jobs, health problems, disability etc. Our world is also going through turbulent times and we are looking at safety nets that have been established. Why not create our own safety net?

We need to set our goals higher than just earning enough to live by; otherwise, we will never have anything to hold on if ‘tragedy’ strikes. We need to earn more money!!!

How do we earn more money?

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