People say saving money is the path to fortune and we couldn’t agree more, but with all monthly payments, debts, and other expenses, saving money seems rather impossible.
Putting money aside is always a good idea as you can use the money in bad financial times, for a good business opportunity, or additional expenses. Living on a day-by-day basis is a bad idea and if you lose your job you are very likely to face bankruptcy.
Those who still haven’t developed the habit of saving money aren’t aware of the advantages that come with it. Many people “live in the now“but they should keep in mind that though things seem well now, something unforeseeable can happen that would require cash to be used.
There are many expenses and other factors that limit our ability to save money such as vacations, eating out, weekend getaways, and clothing. But, we don’t say that you should stop enjoying anything, but we say that additional and unnecessary expenses should be the exception more than the norm.
Tips for saving money
1. Write down your expenses
One of the best ways to save money is to develop a habit of writing down every little thing you spend money during a month. Thus, you will be aware where most of your money is going—for example, coffee on the way to work, lunch at the office, hand cream, or taxi fare. When you realize where you spend your money, you can cut down on any necessary expenses.
2. Set a budget
When it comes to shopping and paying bills, you should set a budget in order of being aware approximately how much money you will need every month. Take all of your fixed expenses into consideration and try not to overpass the maximum allowed. However, there can be changes, for instance, in the electricity bills, so if it went up you should use the lights less often or doing laundry only once a week to reduce your power consumption.
3. Setting money aside
People often do the same mistake by paying all of their bills and expenses and then putting some money aside, but this strategy limits our ability to save money.
When trying to save money you should save about 10% of your wages and assure that it gets where it is necessary. Find out which situations or purchases require taking money out of your savings such as medical emergencies, car problems, emergency house calls, etc.
4. Lower your expenses and debt
Lowering your expenses and debt is a crucial step for improving your finances and provides you the possibility of planning for the future. It is recommended that you stop paying the minimum amount on your credit card and that you try to get ahead on your personal loans. Thus, you will not go more into debt due to interests or penalties.
Eating out every weekend, buying clothes every time you get paid can easily leave you with very little to put into savings, so you should for example considering going out only once a month, buying clothes only for special occasions, like for your birthday. Stay home once in a while rather than traveling every holiday.
Thus, your finances will be a little “calmer” and you’ll be able to save money.