The all-time golden rule: Spend less than you earn

It sounds so simple, doesn’t it? But not easy, especially for those living hand-to-mouth, in Covid-19 times like these.  However, simply spending less than you earn has a cascade of positive effects. First, if you are coming from an indebted background, you begin eliminating your debts. Spending less than you earn frees up more money so you can make larger payments on your debts. Over time, the debts begin to disappear.

Second, you begin to save. You build up some cash savings, enabling you to roll through emergencies—like a car breakdown or a job loss. You will also have the breathing space to start saving for retirement, paving yourself a great future for your golden years.

Third, your stress levels fall. Knowing that you have fewer debts, have some savings, have your emergencies covered, and that your retirement is being planned for, reduces your stress level. You sleep better even during lock-down times, your overall health improves, and you feel happier about life.

Finally, spending less leaves you with savings that allow you to explore possibilities closed to you before—you can define your destiny. When your debts are gone and you are spending far less than you are bringing in, you suddenly have many more career possibilities. You have savings to help you do the education you have always dreamt about. You don’t have to stick with your high-stress job—you have the financial freedom to move on and chase your dreams. You can live wherever and however you want to live.

All of that comes back to one basic principle—spending less than you earn. But for you to spend less than you earn, you need to be earning more. How? First, don’t waste time idling. The time you spend sitting idle, being on WhatsApp aimlessly, or chatting with your buddies for hours is time you have effectively lost. Instead, invest that time in something devoted to your career, to planning a small business, to building strong relationships with as many people as you can in your field. Trust me you have so much potential as an individual to just waste. Every time you spend time, ask yourself if you should have put it to better use— remember, age is catching up with you—your time to create wealth is diminishing. You will prosper if you maximise the gap between what you earn and what you spend.

A blessed week-end to you and yours as you plan to spend less than you earn from now onwards—unless you are assured of earning more later from the overspending.n