The recent Reserve Bank of Australia (RBA) interest rate cut will see many living off of fixed incomes with a reduced rate of pay. So, how to make up for the shortfall? One way in which you can get ahead is to trick yourself (and others) that you receive less income than you actually do. And there are some pretty good reasons to do so.
You won’t spend what you don’t have
The best way to save money is to pretend that it doesn’t exist in the first place. You can have part of your income transferred into a separate account the same day you are paid so that you are not tempted to use it. This way, when you want to add more to your nest egg or go on an overseas trip, you’ll have the coin to get your wish.
Increase your retirement savings
Depositing more money into your retirement savings is always a wise move, and pretending you have less income can sometimes make it easier to save a bit extra – allowing for the money that you do save to have more time to grow. And you’ll not often hear anyone complaining that they wished they hadn’t saved so much for retirement.
Pay off debts quicker
Pretending you make 10 per cent less money than you actually do means you can train yourself to cut back on your weekly spend – to better fit in with your ‘pretend’ budget. And that 10 per cent you’re not spending each week can instead go towards reducing or eliminating any outstanding debt you may have. Or you can direct these funds towards your annual holiday or turn some other dream into a reality much quicker.
Save money for a ‘rainy day’
Having a ‘rainy day’ stash is invaluable for those unexpected emergencies. That way, if you car breaks down, your income dries up or someone in your family needs medical help, you’ll have the funds to see your way through without having to delve into credit – along with the interest that accompanies it – and further increase your debt.
Less pressure for you to splurge
Fancy restaurants, Gold Class cinemas and weekly manicures are nice, but do you really need to enjoy them each week? We’re not saying to quit on all of life’s little luxuries, but pretending you have less money than you do can encourage friends and family to be more creative with joint activities. If your friends think you are on an economy budget, chances are they won’t assume you have a first-class salary. Instead, going for a walk with someone allows for quality time spent, along with good conversation and an enriching experience, both physically and emotionally. These are things money can’t buy.
Freeze the ‘human ATM’ account
Some people think that because you have money saved, you then have an obligation to share it with friends and family. If you feel that pressure, it may be wise to pretend you have a little less income than you actually do. That way, they’ll be less inclined to ask for money. If you’ve fought long and hard to reach retirement, then it’s important to make sure you can live out your years well or, at the very least, comfortably.
Do you have any good money-stretching tips that you can share with other members? Or do you know of any free or inexpensive ways in which to save a buck? Why not share them?