Saving Money: Are you finding it hard to save money? Or, you always hope to have a little left over at the end of the month but it is not possible? If yes, then please pay close attention to this article.
It is pertinent you know that saving money is important if you want to accomplish your long-term financial goals.
Without money put away in savings and/or investments, you open yourself up to other risks. Not having enough money to pay for emergency dental care may force you into taking a loan.
Simple Steps and Tips of Saving Money
Map Out Your Goals
When saving money, one of the simple steps and tips to take is to map out your goals. You do not have to do anything other than spend some time day-dreaming. What would you like your life to look like next year? In five years? In 20 years? Do you want to pay off debt?
Write down each of your goals. Then estimate how much money you will need to accomplish each goal.
Having a clear idea of your financial goals is important because it will give you something to work towards. It will motivate you to save when you would rather spend money. It will also help you figure out how much you need to save each month to accomplish the things you want to do.
Figure Out Your Current Monthly Spending
You cannot know how much you need to cut back if you do not know how much money you are spending. Take a look at your credit card statements, checking account statements, and cash receipts to get an idea.
If your spending is higher than you imagined, perhaps you can identify areas where you are spending recklessly. Determining where you regularly over-spend is key to figuring out where you can start cutting back.
Set Monthly Budgets
Another step or tip to saving money is to set monthly budgets. You have to divide your take-home income into three separate pools of money. These pools are:
Fun money budget.
Other Simple Steps and Tips for Saving Money
Save windfall income.
Collect loose change and deposit it in the bank.
Break a habit.
Have a “buy nothing week”.
Compare costs of major items before purchasing anything.
How to Create a Necessities Budget
To create a necessities budget, start by adding up your non-negotiable obligations. These obligations are; rent or mortgage payments, auto insurance premiums, gas (or public transportation). As well as, utilities, and anything else you need to pay for every month.
Please note that these are expenses you absolutely cannot do without. As such, include money for grocery shopping here, but not for take-out food.
For budgeting purposes, subtract this amount from your gross (i.e. after-tax) income. If it is less than half of your current income, great! If it is more than half, you will need to make adjustments.
How to Create a Savings Budget
The 50/30/20 rule suggests you think about your savings budget last. However, putting it before your fun money budget is a way to ensure you make your future goals a priority.
After taken care of your necessities and savings budgets, decide what kind of fun things you want to do with the rest of your cash. You could use this money for dining out, shopping, or anything else not considered a “need.”
Also, add up the money you are spending on things that fall into this category. If this amount is more than 30% of your after-tax income, you might not have enough to meet all your spending goals.
If the amount you are spending is less than 30%, you are in good shape. You can enjoy it now, but you also should consider creating a new savings goal.
Saving Money Each Month
If you did not have enough cash flow to fulfill each of your three budgets, this is what to do. Make some changes to your spending so that you can stay on track.
Also, follow these simple steps in saving your money monthly;
Rent a cheaper apartment.
Refinance your mortgage.
Bundle your insurance.
Choose Netflix over cable.
Write down your shopping list before hand.
Switch cell phone providers.
Comb your credit card statement for grey charges.
Work out at home.
Use the library.
Choose generic over brand-name.
Make extra money.
In a Nutshell
Saving money may appear difficult some times, but following the above steps will make it simple.