How To Save Even When You Have Needs

Or, put another way, how to save when your expenses are greater than your income.

Or how to save when your needs are more than even your expenses can cover.

A couple of Letters ago, I wrote about the importance of saving, and as a typical person trying to become rich, that surely raises the questions mentioned above – what if my needs are greater than my income?

To answer that, I will first take you back to high school Economics class, where we were taught the difference between needs and wants.

Believe me, what they taught you in that topic was correct (and we think our secondary school subjects have no bearing on real life).

Needs are very different from wants.

So the first thing you want to do is ask yourself if your ‘needs’ are really needs and not wants.

And you need to be really honest with yourself.

Obviously, food, clothing and shelter are needs. But what about cable TV subscriptions?

In this age, one could argue that having a phone is now a need, but Samsung Galaxy A20? (I’ve got nothing against Samsung. I think their phones are among the best mobile phones, actually).

Yes, you ‘need’ a PC for your work, but what type of PC do you need?

If most of your needs are influenced by what other people have, then you might want to check yourself again.

Savings can be created by spending less.
You can spend less if you desire less.
And you will desire less if you care less about what others think of you.

Morgan Housel

Now, let us assume that you have done a thorough audit, and the remaining needs are really needs, but they are still more than your income, how then can you save?

I’ll tell you the secret. It’s a secret I discovered after years and years of study and hard work, so make sure you don’t treat it lightly.

Ready for the secret?

Here you go:

Poor people save what is left after spending. Wealthy people spend what is left after saving

Now you ask, “but I just said my income is smaller than my expenses, how can you ask me to save first?!”

Parkinson’s Law states that work always expands to fill up the allotted time.

Meaning if you allotted 3 hours for a task, you will just about finish it in 3 hours.

Whereas, if you had allotted 1 hour for the same task, somehow, perhaps magically, you will just about finish it in that 1 hour.

Now bring that same law to your money.

If you had $2,000 to spend, that amount will just about be enough for you.

Whereas, if you had budgeted $1,800 (because you had saved $200 first), the remaining amount will somehow, perhaps magically, just about be enough for you.

So, what is the secret to saving when your needs are greater than your income?

“Do not save what is left after spending. Spend what is left after saving.”

Warren Buffet
Samuel is an avid reader and a freelance writer, in that order. He fancies himself funny, but his friends regularly don't laugh at his jokes. I have been a student of personal development for several years, and I created this blog to share my knowledge with others and help them become better versions of themselves.

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