Do you have a savings account?
How are your spending habits?
Have you identified your opportunity costs?
If these are things you’ve been wondering about, then stick around. This is going to be an interesting conversation about your financial future…
You must have heard Ben Franklin’s gem of wisdom: “Beware of little expenses. A small leak will sink a great ship.”
Small and consistent expenses can seem harmless. But they can do more damage to your financial future than you might think.
Instead of looking at expenses from a negative perspective, I like to see them as opportunities. So I call them “opportunity costs”, as they can benefit me in the long run. Here’s how…
What are those little expenses that can sink your ship?
Time for a little introspection…
Identify a few small but constant expenses you can remove from your daily routine. A little can add up to a lot in the long run!
Let’s take a look at some examples of small expenses you could cut back on:
- Your daily cup of coffee
- Your breakfast bagel
- Eating out on a daily basis
You can cumulate these savings with your annual savings and put the money aside for a house deposit or make some extra debt repayments.
[ctt template=”7″ link=”951If” via=”yes” ]Tip: When trying to cut back on a financial habit, try to do it gradually and consistently.[/ctt] For example, you will have a greater chance to succeed if you allow yourself a cup of coffee in the weekends. Continue cutting it back to once per week and finally cut it altogether.
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Adopt an opportunity cost mentality
Do you live in the now?
Or do you use delayed gratification with your expense habits in order to save up for a bigger reward in the future?
Whatever your spending style might be, it’s best to identify it so you know how to adjust it.
Opportunity cost refers to a benefit you could have received but you chose to give up on its immediate gratification. Instead, you delayed that immediate gratification for a future, more consistent reward.
For example, the decision to not spend money today on yourself buying a cup of coffee, but save it to benefit your future self.
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Here’s how a little can go a long way…
Let’s say you decide that, starting next week, you’re going to make your coffee at home instead of buying it on your way to the office.
You’re one week into the new habit and you realise this can be harder than you initially realised. So you make a compromise and decide to treat yourself once a week with a cup of fancy coffee.
After one week you save about $30 by making your coffee at home in the morning. $30 dollars per week is $120 per month.
In a year your savings can add up to approximately $1,500. This is pretty amazing!
That’s a significant amount of money from just cutting back on a small, but consistent expense. Imagine how much money you could be saving if you identify 2 or 3 small expenses you could cut back on.
It’s never too late to start thinking about your future.
When it comes to your finances, your expense habits are the things you can actually control. Identify your small expenses and adopt an opportunity cost mentality.
Give it a try! You would be surprised to see how far a few small steps can get you.
I am ready to assist you in identifying the things you could cut back on if you really want to save some cash. I can also help you prepare for your financial future, whether through wealth accumulation, retirement planning or any other method.
Let’s get the conversation going: