Often than not, saving is not the top priority for most people. As their needs and demands rise, the ability to save money lessen because they tend to prioritize expenditures. Then at the end of the day, they will ask themselves: Why can’t I save much when I earn more than enough?
You probably got here because you struggle the same way as others do in saving. But the real question here is not about the amount of money you earn. It’s about how you manage your earnings and expenses properly. It’s not about the quantity, but it’s about how you handle your finances. In other words, it’s all in your habit and mindset.
Don’t worry because there are a lot of ways to stop this kind of bad habit and wrong views about saving. Here are six useful tips to save money:
1. Record and categorize all your expenses.
The most important thing about saving is understanding your expenditures. Record your expenses so you can monitor your spending. But don’t just write them down. Categorize your expenditures to essential and non-essential. When you distinguish and understand your needs and wants, you can easily cross out those spending that you don’t need. It will be also easy for you to create your budget plan when you know how much you spend.
2. Set a goal for your savings.
Whether it’s a short-term or long-term goal, you have to be realistic in setting up a savings goal. Ask yourself: Are you saving for retirement, a new house or car, emergency fund, or education? Align your goal to your income and expenses. Once you know the purpose of your savings, you can figure out how much money you need to save.
3. Make a budget plan.
Goals are just ideas if there is no plan. As mentioned above, record and categorize all your expenses. It’s more effective if you organize them in a spreadsheet, notebook, or a spending tracker app.
Record your earnings as well, especially if you have a lot of sources of income. Knowing your projected revenue will help you to foresee how much you can save. Keep track of your cash flows so you can easily monitor your finances. Doing this will give you control over your saving and spending habits.
When creating a personal budget plan, make it as simple as possible. Design your budget plan template, or search online so you have an idea of how to do it. Always update it with all your financial transactions so it will be accurate and timely. Make it a habit to always journalize what you earn and spend.
4. Prioritize savings over expenses.
There is only one rule for this: save before you spend. That means put away your savings immediately before you allocate your earnings to your expenditures. It's not easy at the beginning, but you will get the knack of it. Do it habitually every time you get your paycheck.
5. Minimize your expenditures.
Once you categorize your expenditures, cut down your discretionary expenses. Make smart ways to spend as well, like look for alternatives with your spending. If you are a coffee lover, it’s way better if you make your own coffee than buying takeaways. It will be difficult for you at the start. But those few dollars you can save from it will make a huge difference when accumulated in a month.
6. Pay your bills in full. Don’t accumulate your debt.
Another important thing to consider in saving is controlling your debt. Some people can’t save because they put their earnings on paying their debt’s interests and fees. They will pay those charges but the principal amount doesn’t decrease. Avoid this by being responsible for your obligations.
Keep this rule in your mind: Don’t borrow money if you can’t payback. This also applies if you own a credit card. Don’t purchase something you can’t afford. Your assets – that means including your cash – should always be more than your liabilities to make your net worth positive. A positive net worth indicates that you are in control of your obligations.
Sticking with your plan is difficult, and it requires a tremendous amount of patience and determination. It's a long way to go. But if you will start a good habit today, it will eventually pay you off with exceptional results. Remember, there is no gain without pain. Always focus on your goal, and you’ll get there in time.
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