The important thing is to start building the habit of saving money. Once you are comfortable with the habit of saving money, you can easily increase the amount based on your financial condition. Hence, it is important to make a financial plan and evaluate your monthly expenses.
2. Set a financial goal
What do you want to save for? Is it for renovating your home? Buying a new car? Your child’s education? Or an emergency fund perhaps? Setting up a goal will help you with your financial planning and motivate you to save consistently over time. Make sure your goal is a top priority so that you don’t indulge in making unnecessary purchases. Keep reminding yourself how much this goal means to you so that you can save up faster and avoid the temptation to waste money.
3. Track your spending
“Look everywhere you can to cut a little bit from your expenses. It will all add up to a meaningful sum.” – Suze Orman
Track everything you spend your money on. Even the smallest purchases and expenditures matter. Throughout the month, we make several forgettable small expenses. As a result, it may seem that money just tends to disappear despite your best efforts. Write down everything you spend your money on and don’t skip even the smallest details. This will allow you to track where and how much you are spending and help you understand which expenses are unnecessary and can be cut down.
4. Make arrangements with your bank
Talk with an executive or manager at your bank and do whatever you need to so that a fraction of your income is directly transferred to your savings account. There are systems that banks utilize to make it happen automatically. As you will transfer only a fraction of your paycheck to your savings account, you will not need to take it out. A separate savings account can be of great help for saving money, especially in case of emergencies. So if you don’t have one already, make it happen immediately.
5. Use a good credit card
If you need to use a credit to make your purchases, then choose a card that offers you enough rewards for every purchase you make. A credit card that offers points and rewards for spending can help you in making purchases through discounts, cashback, and travel rewards. So make sure you get the right credit card for you and take advantage of their reward system.
6. Live a life of comfort, not luxury
Making small changes to your current lifestyle is crucial for saving money. There are certain luxurious expenses that you can easily live without. However, if you cut out most of the things that help you and your family enjoy life and make you happy, then you won’t be able to save in the long term. Calmly figure out what expenses you can cut out and what things you need to feel happy.
There is a thin line between what you need to be happy and what you want. Make sure you realize that. Moreover, if you spend only on the necessities and make a drastic lifestyle change, then sooner or later you will get frustrated and cave in, which will lead to an unnecessary impulsive purchase. So make sure you find the right balance between keeping yourself and your family happy and maintaining your savings account.
A life of financial freedom is a life of happiness
“Balancing your money is the key to having enough.” – Elizabeth Warren
Saving money makes a lot of sense for a lot of reasons. What doesn’t make sense is making a big unnecessary purchase that can land you in crippling debt. But savings doesn’t need to be a struggle for you. Savings should make you feel happy about it. That’s the whole point.
Saving money properly gives you more options and peace of mind without altering your life too much. When you find the right balance between your living expenses and saving money, you will start reaping the benefits.