1. It gives you control over your lifestyle: Life becomes monotonous and boring when you lose control. Everything on the shopping shelves becomes a need and desirable. But setting a rule, not to spend more than 50% of your income on all your needs and another 30% on your wants, gives you the driver’s seat in your life. The next thing after this has been mastered is to periodically work at reducing the amount you spend in each section of your monthly budget.
2. Unforeseen Expenses: Reducing your monthly expenses frees some cash for an emergency. Say your car needs some major repairs. And you need N10,000 to N50,000. What if your house needs repairs or your roof suddenly spouts a leak? You can’t always depend on friends or your bank to lend you funds every single time you run into an emergency. It is much better to anticipate that emergencies may arise, that way, you have something set aside.
3. It frees funds for savings and investments: The rush of excitement you feel after purchasing all those fancy new toys usually dissipates soon enough. When you look back at how you have spent all your income from the last 2, 5, or 10 years of work, will you have anything to show for it? Save yourself that heartache and start to put something aside from TODAY. As you do so, gradually build up on the amount set aside till you can comfortably set aside 20% of your earnings.
4. It reduces your fear of losing your job: Most of the irrational decisions and actions exhibited by many in the corporate world are tainted by the fear of losing their jobs. With this fear ever present among the employed, you find that they end up rationalising fraud in the workplace. You should not be reduced to these vices, for the singular reason that you have nothing to fall back on, the unfortunate happens and you lost your job.
5. Financial Independence: Even if your desire is not to become wealthy (I doubt if there is anyone with this thinking) it pays to be the one calling the shots, financially speaking, in your personal life. Not your boss, by what you get in your pay cheque. Such as deciding to go on vacation, return to school or launch out in a business venture or pursue your dream in other areas of life.