Even though Finances are one of the hottest topics in the world – the inability to manage money is one of the most underestimated dilemmas of mankind. Humanity misuses the power of money and loses its advantages for temporary satisfaction.
Pop culture and the trend of consumerism is influencing buyers on the spontaneous spending. Triggering people to buy things we never use. Provoke viewers to donate for the random entertainers offering no added value. That kind of decisions twisting in our minds and makes us look silly. We need structure, we need discipline, and we need to teach ourselves how to manage our funds.
Benjamin Franklin once said, “Money makes money. And the money that money makes, makes money”. Two assumptions can be seen in this quote. One is that if you let your money work they will earn you a profit which reinvested will grow even more. But we should raise another question as well, what happens if money does not make money?
If money does not make money at some point, there will be no money left to spend!
Managing funds is a hard thing to do and not doing it correctly leads to a lot of problems. Today’s culture dictates you to have the newest smartphone, expensive clothes, latest cars, and other things. That leads people chasing the trends meaning spending money irrationally on things that will be out of date in a few months. As a result, we have average American with €33,5k in personal debt, and 29% of American households have less than €1k in savings. According to Northwestern Mutual Planning & Progress Study 2018, 2 in 10 Americans spend 50-100% of their monthly income on debt repayment.
And to our surprise, people still find a way to waste their money, for example on donations for video games streamers or in-game purchases. Just imagine that top ten twitch streamers make more than €17.5 million a year! Streamer Ninja earns more than €3.5 mln. from subscriptions and donations. Or a game Fortnite which by the way is free generated more than €250 mln. in revenue in one month.
We must look to our finances more seriously because if we won’t, our future generations will be born with a negative balance in their bank accounts.
What should you do?
Do not try to solve the global spending crisis and start from yourself. Try to split your monthly assets to three parts, needs, wants, and savings. This will help you to track your expenses and manage it properly by cutting out the unnecessary spending habits.
Needs include all the money that is spent on necessary bills and the things that are essential for living. For example, rent or mortgage, car, food, utilities, insurance, etc. By identifying what is vital, you will be able to see where money is wasted. For example, food is essential for survival, but do we ever wonder how much money we lose on the unnecessary products? Research carried by Safefood showed that in Ireland, families spend more money on treats than vegetables. That shows that there are expenses that could be reduced.
Wants shows the expenses that are not that essential but necessary for your entertainment. For example, eating out, watching movies at the cinema, new phone or any other high-tech gadget. Wants expenses are at its peak at the moment. As consumerism runs our community more and more money is spent irrationally and impulsive. It is believed that around €5 a year is spent on impulsive purchases. €450 in a month! Not to mention all the expenses on entertainment and new iPhones. By tracking and reducing the wants expenses, you will have extra money which could be used for better purposes.
Savings should take part in your financial life as well. Have you ever wondered what would happen if you save €5 every day? That would cut your morning coffee with the croissant. You would save around €150 a month and about €1,825 in one year. Well, it may sound no that much, but we must remember that money should make money. That is why investment is an essential part of your financial life. A very conservative investment earns about 4% return on investment (ROI) annually, that would grow your little savings to €135,000 in 35 years. Well, that sounds great! It gets even better when you choose to invest your money with alternative investment companies. They are like Revolut in banking, just in the investment field.
While alternative investing is a bit riskier than conservative investing, it can bring you a higher return on investment. For example, Fast Invest alternative investment platform offers 9 to 16% annual interest rate. So if you invested €150 each month with 10% ROI, it would grow up to €561k in 35 years! At the same time, there are BuyBack and Default Guarantees that protects your assets. You can try it yourself the registration shouldn’t take more than a few minutes.
As we see there is an antidote to the financial madness, we need to be aware of what’s happening. We must track our expenses to see the flaws in our spending habits, remember: needs, wants, and savings. And never leave your money in the bank account because money needs to make money. Fast Invest can help you with that, by starting investing now you can make a significant impact on your future and the generation to come.