5 psychological savings tips

 End of the month again, why my wallet getting more and more "skinny"?. In this era of rapid inflation, I believe that lack of money is a common problem among youngster nowadays. Once they get their salary, they will spend it unconsciously. If you wanna accumulate your wealth, first you have to know how to save your money, control your purchase habits then only you have enough money to invest. Today I wanna share 5 psychological savings tips that can help you to control your income, avoid purchases traps and achieve financial freedom.

• Use paper money

Don't underestimated this tip. We can have feeling with something which is touchable, so when you are giving out your hard-earned money you will feel a sense of reluctance. By using paper money, it can help to control our purchase desire because paper money are something which is touchable and visible compared to using credit card and online payment. Consequently, you will think twice before you purchase somethings. If you use credit card or online banking to make payment, usually you won't think twice and can't control your purchase desire because if you use credit card or online banking to make payment, it is just a change of number and it won't let you feel any sense of reluctance. If you're a fresh graduate or a student, you can set a withdraw limit per week. For example, set RM250 withdraw limit per week and withdraw RM250 from your account first then told yourself that you only can spend RM250 this week. This way could be effective in control your purchase behaviour.

• Use credit card in a right way

Most of the fresh graduate they will apply for a credit card after a period of working time. Credit card is also one of the factor that increasing your expenses. This is because credit card will give you various type of reward such as points, cashback, dining voucher and these all will keep affecting our purchase decision. For example, you might buy something that is unnecessary just because you wanna get the reward. Although credit card could increase our expenses but if you use it in a right way, it could help you to earn money as well. Before you apply credit card, you have to make sure that where are your money spending to and which type of credit card is the most suitable one. For example if you always buy things via online then choose a credit card that provide online shopping discount and cashback. Furthermore, credit card also can help to build your credit score. Most of the time we fail to get housing loan and car loan is because we have a poor credit score and bank don't approve is because they don't know whether we are able to pay off or not.  If you always use credit card it can help you to build a good credit score but you have to ensure that you pay it back monthly. Consequently, you will be more easily in applying your loan in the future.

• Monthly statement

If you can't measure your cashflow then you also can't manage it. Most of youngster have a tendency that is don't know where their money spend to because they don't manage their money. So we are encouraged to record our daily expenses. Once you record your expenses, you will know what you spend for and also you will know what kind of unexpected expenses you have such as petrol fees, accident and so on. After you record all the expenses, you can review your spending habits every month and you also can check and see which aspect you spend the most. Actually, you can record expenses by using certain application and it is more convenient because the app will help you to visualize the data into chart and you can extract more useful info from that. In addition, the application also can help in reminding your spending habits.

• Ignore promotion

We can see promotion almost everyday whether in television, online or shopping mall and we will feel likes almost everyday the products are doing promotion. Some of the people will easily affected by these all promotion. So we have to avoid watching advertisements and stick to our purchase list only. When you reduce the frequency of watching advertisements, you can avoid yourself in impulse purchase. Thus, before we purchase we have to list out all the necessary thing we want to buy and stick to the list and avoid buying  unnecessary things. For example buy chewing gum when you pay at counter or buy an addition coffee that is not in your list. Maybe you will think "Doesn't matter, just one or two addition things only" but this kind of idea will increase the unnecessary expenses. With each passing day, it will become a large amount. Hence, when we are purchasing, we are encouraged to stick to the list and avoid buying unnecessary things that are not in your purchase list.

• Income distribution

You can distribute your income by using JARS system. By using JARS system,  you can distribute your income into 6 jars these are investment, contribution, savings, play, education and expenses. In this system, we are encourage to distribute 50% of our income to expenses jars. If you realize that 50% of your income is not enough to cover the life expenses then you have to check and see your spending habits to find out the main reason. The rest of the 50%, you can distribute to investment, contribution, savings, play, education by 10% each jar. The money you distribute to investment jar is used to invest in assets such as stock, real estate, business and so on. The purpose of this jar is to help you in achieving financial freedom by investing. For education jar, it is used to upgrade yourself by short course, seminar or bootcamp. Play account is used to reward yourself such as date night, massages, weekend getaways. We also have to budgeting to play not only for save. For the savings jar, we save it in order to spent in the near future. It could be used as down payment on a house, a car, a vacation or anything else you think will be important in the coming years. And for contribution account, we used it to do something that is contributing to the society such as donate to church. Actually, the distribution ratio is flexible you can change it based on your current situation. Most of the people fail to save money because they don't make any plan for their income distribution. If you don't make any plan then you won't know about your cashflow.

These are the five psychological savings tips that I wanna share today. Before I conclude, let me repeat these five tips. First, use paper money because you will feel a sense of reluctance. Second, use credit card in the right way to build your credit score. Third, adopt the habits of making monthly statement in order to know your cashflow. Fourth, ignore promotion, avoid watching advertisement and stick to the purchase list. Last, income distribution to control your cashflow and manage your income systematically. Hope these five tips could be helpful to you!!!