The value of our money somehow depends on how it is used. Currencies may change but money’s main uses often remain constant. Money is used to purchase a house, send a child to school, as well as to save up for a comfortable life after retirement.
Seeing money only as a spending resource is one of the biggest financial mistakes people make. Although a majority of us may not be aware of this, practicing the proper way of spending money might just be as difficult as earning it.
The reason why most of us panic during difficult financial situations is because a majority of us do not have an emergency fund to fall back on. We have probably spent everything we have earned for the past few months or even years. One of the ways to guard yourself during the occurrence of depressed economies, sudden illness, and job layoffs is to set aside a certain amount of money that is sure to last between three to six months.
It is important to start an emergency fund and build up on your savings to insulate yourself from financial distress. Things like unemployment as well as home repairs and expensive car maintenance can consume a huge amount of our money and most of our monthly salaries cannot cover these additional expenses all at once. So instead of using money to buy things you don’t really need, it might be a smarter strategy to deposit that money to an emergency savings account.
Apart from saving, it is also advisable to prevent yourself from having any extra expenses by acquiring debt. Most of us find it easy to purchase thing through credit. Instead of using credit cards to buy random things we don’t need, credit cards should be used only for immediate expenses.
