Save Money The Right Way

Save Money The Right Way

We all have heard a lot about how saving money is going to end up with you being wealthy and prosperous. We are being told continuously how to save money the right way, why we should not spend more and why we should be spending time to find deals and sales to save money. If you search on google how to save money, you will find hundred of articles on tips and tricks how to save money starting from finding cheap flights to piling up coins in a jar.

What if I tell you that everything you have read about how saving money can make you really rich is just not right and a waste of time.

Life is all about making choices and some of these choices and decisions shape our personality and determine who we are. So while I do agree that if you save money, be a miser; compromise on things that you need and spend hours to find deals and packages to save money. You will end up with some money to keep your boat afloat, but does it make you wealthy, if you end up having a couple of million dollars in your account by the time you retire?

So let’s suppose you do consider that a couple of millions is great wealth and you do end up with it at 60 or 65 years of age after saving and suffering your entire life. Are you rich? NO, you are not. Your children may be though.

So the question is, if this is all crap, than what is the real way to save money? The answer is simple.

To save more money, you need to make more money.

The Example

Let’s try to understand this with the example of two people: Mr A and Mr B. Both of them earn $ 5000 a month and spend $ 4500 every month and both of them want to be rich. So, Mr A decides to find out newer opportunities to make more money so that he can save more while Mr B starts to save an extra 1000$ a month by finding great deals at sales and compromising on some of his usual requirements. Now let us see where both of them end up in ten years from now.

Mr A spends normally, not saving much but finally in a couple of years spends his time to find a way to make an additional 5000$ a month and thus increases his spending to $5000 a month while still saving $5000 . Assuming that Mr A saved only $ 500 a month for first five years and $5000 a month for the next 5, we can assume that his total saving at the end of 10 years totals 360 K.

Mr B certainly is happy saving money for good old rainy days so he spends his time to find deals, travel packages, doing all chores by himself and saves $1500 every month for 10 years and ends up with 180 K. Which is still not bad but comparing with 360 k of Mr A, it’s only half and in the next decade this gap will increase further.

In 30 years, for the sake of ease, considering no interest rates are involved nor any of them increases saving, Mr A ends up with 1.6 million dollars whilst Mr B ends up with a mere 540 K and only 1/3rd of what Mr A has saved even though Mr A has spent more lavishly and lived a better life style.

Battle of the mindsets

I have come to believe that our choices determine who we will be in the future. Today you have the option to be either of the two guys I quoted above . But you must remember that once you enter the mindset of a saver, you stop expanding your horizon and you are unable to take risks because your basic mindset is about saving money. You do not wish to invest in business or grow your sources of income because that may result in the risk to your money and is against your basic mindset which will thus stop you from being really wealthy in life.

A saver will live poor and die middle class.

On the other hand some one who is ambitious and wants to expand, may suffer initial set backs but will ultimately find the key to success and will be able to create real wealth without compromising his life style.

Time is the most precious commodity

TIME not money is the most precious commodity and what you really need to save. A smart man understands the importance of time and knows that it is better to spend it to find  a way to earn an extra $1000 rather than to waste it to save a $1000 . You need to understand that you need to spend time to achieve any one outcome and it is not possible that you can have enough time to achieve both.

So you can spend your time looking for deals and stuff and doing chores yourself like all those articles on the websites tell you.  Or you can spend that time to start a blog, website, open up a shop on Ebay or make a new start up, the choice is yours.

Remember, if you learn to make an extra 1000$ than you have all the chances to enhance that in days to come thus taking it to 2000, 5000 and 10000 $ in years to come but the chances of increasing your saving really isn’t possible.

Now do not get me wrong, when I tell you that you do not need to save, you just need to save it the right way. 

Spending wisely is more important than saving money

While you are working on how to save money, do understand that at all times you must spend wisely. The first thing you need to do in your life is to establish a lifestyle that you want to live. Keep things simple, you do not need to wear expensive designer clothes,  I can assure you that will be pretty happy without them. You do not need a huge house when you can live easily and comfortably in a smaller one that fulfills your need. You do need a good car but you do not need to buy a Bentley. Similarly by living a simple yet fulfilling lifestyle and staying off from showing off, you can save huge sums without wasting time on how to save.

However, spending wisely is totally different from saving money and it does help you save more when you actually start making more money. It is also important that you do not increase your life standards substantially once you start making money as you should be happy and content with the lifestyle choice you have made to begin with.

Bad assets vs Good assets

The best example of a bad asset is a car, not only does it depreciate but you also need to spend money on it for maintenance and gas. A good asset on the other hand not only appreciates but helps you generate more money and revenues which will improve your savings.

So yes try to spend wisely on things such as cars, mobile phones , expensive clothes etc but at the same time spend on building productive assets like your business or invest in real estate, bonds , dividends etc.

Conclusion

It is my strong believe that the saving mindset is some thing which tends to limit your capabilities and if you really want to save money you need to get rid of that altogether. Instead, lean towards spending wisely and making more money.

Look around today, do you really believe that Elon Musk, Bill Gates or let’s come down to our local tycoons like Mian Mansha, Malik Riaz etc that they have grown wealth by saving a few bucks every month or they have worked hard to make and find businesses to make more money.

While I do agree that making money is probably not for everyone and even if you do not make it to the top tier, everyone out of us can easily add a $1000  to our income by doing  small things and even if you only save as much as the saver does and end up with only $1500 saving every month, you are still in a win win scenario as you live a much more fulfilling life than Mr B with an extra $1000 in pocket.

Captain (Retd) Shahnawaz Yaqub Bhatti

Founder and CEO at Imlaak

Mob: +92 333 1616160 ( WhatsApp)