Live smart, live savvy!

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A lot of us doing research right now are out for the same thing, we want to live savvy. Being savvy happens when we take smart advice and apply it, it’s just that simple. So how do you live savvy? Follow some basic principles and tips and you’ll be well on your way.

Not all of them will seem easy, but that does not mean they’re not worth doing. Most of the rules to living a more frugal and financially savvy life hurt a little at first, but boy, do they pay off in the long run.

Tip #1 Know what you’re working with. Intimately. Always.

This involves a calculated amount of personal awareness into how much you’re making, how much you’re spending, and where your flexibility is. This means checking in not just once, but regularly, and is an absolute foundation to being savvy with your money. You can’t be successful if you don’t know the limits of your own success and weaknesses.

Tip #2 Don’t just live within your means, live below them

Your money should be accounted for, but not constantly spent to the last dollar. If you’re finding you’re frequently waiting on that next paycheque then you may be living within your means (depending on how much debt you’ve gone into in the process), but you’re not living below them.

The reason I say live below your means is this is the only way to generate income to play with (invest, save, plan for the future with!). You need extra if you’re going to stay ahead of the game, and the only way to have extra is to ensure it’s not all spent.

This may feel rough at first, and certainly holds a bit of a learning curve, but is surely one of the most powerful financial savviness tips.

If you’ve been reading along so far you may think you’re expected to never spend another dime. This isn’t the case, and it isn’t a realistic goal! The goal here is to ensure that you’re not over-spending, and that you’re being as wise with your money as possible.

Tip #3 Understand investing and spending, and use both to your advantage

Did you know that there’s a difference between spending and investing? You can spend on investments, and it’s investing. Investments are anything that provides a product that will not depreciate in value, but will hopefully increase.

Spending on the other hand is the act of exchanging cash for goods that don’t add value to your portfolio (or long term benefits).

Spending and investing are both tools that go into being savvy. Being savvy isn’t a matter of never spending, it’s a matter of balancing spending and investing. Balancing it in the most effective way possible.

Tip #4 Look for the best value, not always the best price

A lot of people trying to live frugal only ever buy the cheapest product. Sometimes this is a good idea, sometimes cheaper doesn’t differ from more expensive, and it’s just a matter of saving money. But other times, a product is cheaper because it’s in fact inferior, requiring replacement sooner than a slightly pricier alternative.

So what’s your job? Figure out what’s the best value, and buy that. Always.

Tip #5 Avoid debt wherever possible

One of the hardest to live by tips, but the best to live by, is to avoid debt as much as possible. People are constantly taking on credit card debt, small time loans, and other forms of debt just for a short time – that seems to always get a bit longer.

Mark my words, interest is the opposite of financial security. If you want to be secure, avoid interest payments – and debt.

Tip #6 Understand what a want is, what a need is, and the difference between them

I have a lot of things that I want. A new sweater, an extra toy for my pet, dinner out at a favourite restaurant – but very little that I need. This is because I draw the distinctions between my wants (desires that are unnecessary) and my needs (bills, shelter, and some food).

Learning what these two concepts are, and drawing the distinctions between them, will radically change how you spend. It’s not that you can never have what you want, it’s just that it’s important to realise it’s not a need.

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