Accumulation is the way to free yourself from overloading your finances. There are very few people who accumulate systematically. So, what is accumulation? Accumulation may refer to money allocated in advance for a specific purpose which we plan to use in the future (other than for our own retirement). We are essentially saving our money to meet certain objectives that we have set in advance for ourselves and/ or our family.
Besides that, time is an important factor of the accumulation. The time horizon for accumulation goals may vary from a few months to as long as 20 years, depending on the objective we set. These are mostly short and medium-term goals. Accumulation rests on the idea of saving our money bit by bit until we have sufficient amount to make a purchase or spend on something that is important for our family.
The importance of this philosophy is that we learn to confront the habit of impulsive spending or spending through credit. Rather than purchasing on impulse, we learn to control and plan by saving money for what is desired.
Hence, accumulation manages impulse buying. The idea of ‘saving first before spending’ contradicts the philosophy of ‘buy first and pay later’. Credit cards and charge cards are based on the latter.
Probably the biggest benefit of saving before making a purchase is that it costs us much less than it would cost us to purchase by credit. Credit installment payments include interests, which can grow to be a huge amount in the long run, especially if you only pay the minimum amount each month. Any purchases which takes away a huge sum of money from our monthly balance sheet should be avoided.
In conclusion, we should plan in advance to save little portions of our income for a certain period of time until we are ready to make a purchase.
