While all people claim that they are spending money to buy necessities that they really need research has shown that there are many people who spend money for psychological reasons!!
Do you know that some people spend money in order to feel in control?
The act of buying what you want and getting what you need using money gives some people an illusionary sense of control.
Some other people go shopping without wanting to buy a specific thing because that makes them feel better. They use shopping to alter their mood and to forget about the problems they dont want to face.
If you belong to any of these groups then certainly you wont be able to save anything. Some people try to control their irrational spending habits by keeping their money at home or writing a list of the items they want to buy but that will never work because unless you find out the root cause and deal with it your spending habits will persist.
If for example you discovered that you spend money because you want to feel in control then you must start on regaining control of your life. If you found that you spend money in order to feel good then you must work on fixing your mood and your bad spending habits will disappear on their own.
In short, you must treat the root cause and not the symptom in order to end such spending habits.
Saving and living below your standard
There are two things that almost all rich people did on their journey to building wealth and that helped them to become rich which are saving and living below their standard.
Let me explain both in detail:
Each month you must put some of the money you earn aside with the purpose of investing them. As a beginning saving 10 percent of your earnings is more than enough, for example if you earn 1000 dollars you must find a way to save 100 dollars.
It might be hard in the beginning because most people are used to spend all they have to finance their life styles but as you keep trying you will learn how to downgrade your life style a bit in order to save money.
The best way you can do this is to keep an expense sheet which is a small paper in your wallet or even an excel sheet on your computer where you record all of your expenses.
In the first month you just have to spend the normal way you do while keeping track of these expenses. In the end of the first month you will get a good idea about your spending habits and you will be able to selectively cancel some of the unimportant items you buy.
Dont get me wrong I am not asking you to wear worn t-shirts or to not eat when you feel hungry but instead I am asking you to buy a small car when you can afford a big one and to buy a big one when you can afford a BMW and to buy a BMW when you can afford a Porsche.
By living a little below your standard you will be able to save some money each month for the sake of reinvesting them. The main reason most people never manage to save is that they live according to the standard of their current earnings and thus their expenses wastes all their income.
Now the important question is how much money to save? That would depend on your goals and on the extent to which you can downgrade your life style but my advice is to save as much as you can provided that its no less than 10% of your earnings.
Saving the money on its own is a good idea but without reinvestment the value of your money will diminish over time.
Getting rich is a state of mind, its a way of thinking and its the result of the presence of certain skills, spending habits and saving habits. Rich people dont over invest, never buy unnecessary items, never destroy money and they know how to save.