“I am on my lunch break but I don’t have money to buy lunch.” It was a shocking revelation from not a predictable homeless figure, but a friend working in financial services industry who earns a what would be an estimated 2.5-fold of my present annual income. 

What has gone wrong? I asked curiously, not intended to pry. Deposit, rent, council tax, gas, flight ticket to Egypt, amongst other items which their presence are deemed absolutely normal and familiar in anyone’s financial list. Alright, maybe not the last one. Bewildered, I wondered have prices shoot up uncontrollably like they never should be due to the persistent inflation rate at worrying level?

Having discussed the issue with my other friends, whom of all are receiving considerably bigger paycheck than me, I discovered that having personal finances going astray is apparently not uncommon, and is certainly independent of one’s earning level. I am aching to uncover the root of the problem. After several discussions, it was dawn on me that all the patients of finances health problem share a common attribute – the endless desire to spend (carelessly) and the derisory determination to save.

Sounds like a cliché I know and I am convinced that you would probably argue that everybody knows this. You may even fight and complain who doesn’t want to save but our earning is just unfairly less and disproportionate to today’s basic expenses. But then again, who doesn’t want a big pay check, bigger bonus, and the smallest tax?

Everybody likes to spend, including myself. However, being brought up in a financially deprived family, I learnt as the first lesson in my life, if you fail to take charge of your personal finances, you are destined to fail. However, to my delight, I also learnt that the key to successful personal finances, or more accurately the secret of successful spending, is no myth and surprisingly simple. It all lies in the state of mind and is resembles to the simplest and most primitive form of trade – barter system.

It is not as intelligence-demeaning as simply comparing prices among similar items, for instance, the difference between tuna from two different brands, although I would definitely argue that price comparison is the fundamental step to successful spending. As we compare prices, we become smarter in familiarising ourselves with marketing and packaging deception. And listen to me, if your tongue can’t distinguish the taste between two seemingly identical products, go for the cheaper one.

Back to the barter system, it requires one to achieve a paradigm shift in their mind when he/she spends, it educates one to distinguish between needs and wants, and most importantly, it frees up individuals by eliminating their desire to purchase and make them recognise the potential of not spending.

Sounds vague, let’s look at an example. Say you walk into a supermarket and pass by the juices aisle. Pick up a carton of orange juice, start asking yourself: Do I want this juice or do I need this juice? The answer is most definitely want. Now think of what you can buy if you swap the orange juice with something else? A loaf of bread which you probably need to make sandwiches for lunch. You will be amazed if you repeat the exercise throughout the entire shopping session and come back home realising that you have bought only what you need but not what you want.

Stretching the paradigm shift to beyond grocery shopping, walk into a fashion store, styling yourself with a £30 blouse or a £50 pair of jeans. Now start questioning yourself do you want or need them? The fact is you want them. Now think of not buying the clothes, what could you spend on using the money? That is one-fifth of a return flight ticket to Egypt. Now the real trick kicks in, weighing between a new piece of garment and an Egypt travel, which one is more enticing to you?

If you choose the former, go for it. There is nothing wrong in wanting a pair nice jeans instead of travelling to Egypt because that is what you want. The example I am giving here is for you to recognise what is the potential of your money, or in other words, the value of your money. It is imperative that we appreciate the value of our money and not its face denomination – the key to barter system.

We save ourselves from purchasing certain items because we realise we don’t need them. At other occasions, we save ourselves from purchasing certain items because we recognise the money is valuable for something that will supply greater satisfaction to us, although it could mean a repetitive exercise before the goal is finally achieved. But the ultimate winning recipe to successful spending control is to save, and recognise how often the word save has appeared in this paragraph.

Possessing a conservative mind, I am a firm believer of saving before spending. My ultimate advice to my fellows: Save at least 3 months, although it would be better 6 months, of your current salary before you start spending. This would serve as a crucial financial buffer if things go sour. And if could achieve a paradigm shift through barter system, congratulations, you are on track to your own finances recovery.

Note: Advice given above is based purely on personal experiences.