Saving money is not really “spending less money”, although that is part of it. People talk about saving money but very few people actually save money. Money can be spent, saved or invested. Of course, investing money will pay you off more than saving but saving money is equally important. As a matter of fact, you cannot be a good investor if you do not know the ABCs of saving money. You need to learn the fundamentals of saving money to become proficient in it.
Deal with the debts first
Your debts are the first place to start. The interests on debts accrue with time and hence leaving the debt to stay longer simply implies accumulating more interest. If you must save before freeing up your debts, you should only save on emergency funds, else you need to deal with the debts first. Emergency funds are funds you set aside to carry you on for 3-6 months in case you lose your source of income.
Set Realistic Goals
It is much easier to save money when you set realistic goals. Of course, the goal should be realistic else they will not be achievable. This will help you to ascertain the amount of money you will be setting aside each month. The goals you set can be classified into two categories namely: short term goals and long term goals. Setting short term goals and sticking to them is really easy but you need more planning when it comes to long term goals such as retirement.
Ascertain the amount you can save each week or month
This largely depends on your paycheck but it helps a lot if you can ascertain it. To do this, you need to breakdown the amount of money you need into the number of weeks or months you want to save it. However, you also need to ensure that the amount you allot for each month is realistic with respect to your paycheck.
Note down or record your expenses
It will truly help if you can note down your expenditures. This will help you to know the things you spend more money on and therefore cut down the expenses. To really achieve a good result here, you need to make sure that every iota of expenses you make will be noted down. Nothing should be taken as trivial. This will help you to see the unnecessary things you spend money and hence make a better money saving plan subsequently.
Create a working budget
A budget is one of the most important things to consider when it comes to saving money. You need a budget once a balance has been struck between your earning and savings/spending goals. A budget will help you to know the amount of money you spend and things you spend the money on. A budget will also go a long way in helping you to minimize expenses and save a lot of money in the process.
Money saving is not truly as difficult as you may think. You simply need a working plan to achieve it.
January 30, 2016