In essence, saving money pertains to setting aside a portion of your income to be spent at a later date. Now, this can be quite tough to do, especially if you have several bills to pay in addition to a large amount of debt. The point of saving money is to sacrifice the immediate use of that money so that it may be available to you at a point when you really need it.
This is the crux of the issue.
If you don’t have your priorities in order, it can be quite difficult to determine what is important and what is not. In many cases, there is a line that gets blurred between an essential expense and what is a non-essential one.
Consider this situation:
You need to purchase clothes. By all means, this is an essential expense. However, there is a difference between needing to renew a worn and outdated outfit and purchasing new clothes, particularly when your closet is already full. If you already have enough clothes, chances are that you won’t need to buy any additional items.
Many times, we are all guilty of purchasing items we don’t need. Furthermore, we are guilty of not prioritizing our expenses. When this occurs, we are taking available funds that should be destined to more important expenses and using them for less important ones.
Therefore, saving money is about not consuming today with the intent of putting that money toward more important expenditures down the road. This can be quite difficult considering that the temptation to spend it lies everywhere.
Please bear in mind that saving money isn’t just about accumulating cash. It’s also about making this money work for you by multiplying it. Yes, it is possible to turn savings into income. While that may seem a bit unorthodox, the fact is that it is quite straightforward.
The most common way to turn savings into income is by putting it into a bank account. The bank pays you interest for having your money deposited in their institution. And while this isn’t always the most effective way to multiply your money, it is a simple way of highlighting how your saving can turn into income.