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Focus on investing not consumption

By Vision Reporter

Added 9th September 2012 01:42 PM

We have probably experienced situations where money just seems to slip through our fingers and surprisingly, we even boast about it. What we forget is that time is not on our side and that the older we get, the less we afford to make money mistakes.

Focus on investing not consumption

We have probably experienced situations where money just seems to slip through our fingers and surprisingly, we even boast about it. What we forget is that time is not on our side and that the older we get, the less we afford to make money mistakes.

By Sylvia Juuko

We have probably experienced situations where money just seems to slip through our fingers and surprisingly, we even boast about it. What we forget is that time is not on our side and that the older we get, the less we afford to make money mistakes.

For example, if you are 24 years with no money to your name, you are in a much better position to make up for lost time. But if you are at an advanced age and attempt to start a business with no prior experience, you may never recover from the losses arising from a business venture that goes sour, yet you invested your pension.

If you have not noticed, we are only left with less than four months to close the year. This is a perfect example of how time is never on your side.

You probably started the year in high gear, citing ambitious financial targets at the beginning. Among all the targets, we shall focus on how you have balanced investment and consumption.

One of the hallmarks of prudent financial management is investing a large portion of your income. If you are still living a hand-to-mouth existence, a situation you were experiencing at the beginning of the year, you have fallen short of your financial goals.

For those in the highincome bracket, it is not enough to feel secure with no investment to your name.

That high income can suddenly disappear, leaving you with nothing to support your lifestyle.

Based on discussions I have had, many people are struggling with their finances mostly because they have focused on consumption at the expense of saving and investing. But this situation can change if you put your mind to it.

One of the things you can consider is taking control of your finances through assessing the portion of income spent on consumption.

Anyone who spends 90% or more of their income on consumption urgently needs to make drastic changes.

We should have in mind that this depends on particular situation or income levels.

For instance, if your income is low, you can probably only get by through consuming all of it. Despite this state of affairs, you need to figure out how to increase your earning capacity. Changing consumption habits may not be easy, but it can be done.

On the other hand, if you earn high income that can afford you luxurious consumption habits, you have to scale down. Purchasing what are considered as doodads (items that take money from your pocket) will not change your financial position.

Instead, you will continuelamenting how money seems to slip out of your fingers, year-in-and-year-out.

If you made it a habit to record consumption daily, weekly and monthly, you will discover why money slips through your fingers.

Once you have a hold of this, you can determine which items can be weeded out. It is likely that people who do not track consumptionhave taken on a high amount of debt, which in turn restricts their ability to set aside money for savings and investment.

It may not be possible to invest if you are still servicing a debt. In this case, you need to pay off your debt. But if you are in a position to save while you service your debt, you are in a better position to turn around your financial position.

One of the mistakes you should avoid is to ignoring your money issues as a coping mechanism. Money worries characterise so many people’s lives as they try to figure out if they will be able to clear their debt and stretch their income to cover the months.

Given such a challenging financial situation, some people opt to ignore their money issues all together, hopingthat one day, their financial status will improve.

You should strive to acquire skills to spot profitable investment opportunities as one of the more sustainable routes to grow what you have so as to achieve financial security.

Focus on investing not consumption

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