The hardest thing about saving money is the first step. Getting started. All of us have thought about saving money to finally afford the dream car or mansion in 20 years’ time. We keep telling ourselves that we will finally start saving tomorrow, or after that well-deserved promotion, however, we don’t. We must realize that you can only save money if spend wisely. Having said that it must be important that your needs of the future are of much more importance to you than your wants of the present.
Worry not Your Wealth Managers Shree Balaji Investment Solution is here to help, here are a few tips to make sure that you start saving today for a better future tomorrow.
1. Kill Your Debts –
Debts are the single worst thing you can do to your savings. Debts stop you from saving and furthermore, eat away at your existing savings. One of the quicker ways to kill your debts is to use the snowball method. In this method, you pay off your debts in ever-increasing amounts through the year. Start with $20, then $40, then $80, then $160 and so on, this way you pay actually less, as you get rid of the added monthly interest and you don’t have to be burdened with debt for a longer time, and of course the best way to get rid of a debt is to not get any debts in the first place.
2. Get A Budget –
Not only does a budget allow you to successfully allocate your funds but it also tells you of your monthly expenditure, this is especially helpful when one often finds themselves counting pennies despite having a large paycheck.
One of the best ways of allocating your budget is 50 – 30 – 20 methods. Where 50% of your salary goes towards the necessities, 30% goes towards the wants and the remaining 20% goes towards savings and paying off debts (if any)
3. Cancel Automatic Subscriptions –
Most people cannot think about life without streaming services such as Netflix, Amazon Video, Hulu, etc. However, think about the number of times you actually use all of them in a month. One of the ways of getting around it can be to alternate between the months, as most people choose to subscribe for specific shows, and they don’t produce shows on a daily basis. Another way of getting around it is by using shared accounts with your family or friends. This both saves money as well as helps with boredom.
4. Set Savings Goals –
One of the best ways of saving money and spending money is temptation. So use it to your advantage. Think of what you want to achieve 20 years down the line, i.e. A bungalow, A car, it can be anything. Factor in Inflation, and keep thinking about it, to the extent where all your actions are driven towards achieving that goal. The temptation for something currently unobtainable will overshadow your temptation for current indulgences. Helping you achieve your savings goals faster.
5. Invest –
Contrary to popular belief saving money does not help you get rich. Investing does. Money kept stationary will lose value due to inflation, but money kept in circulation will grow with time and the economy. Investing in safe stocks, fixed deposits, mutual funds, etc. will put your money to work rather than you working for your money.
6. Think Of Money In Terms Of Work Put In –
A lot of corporate jobs aren’t paid by the hour, however, if you can manage to calculate your hourly wage based on how much time your work for. Doing this can help one attain a new perspective in life regarding their spending etiquette. Say something costs $100, but you earn only $10 an hour, is the product worth 10 hours of hard work. Sometimes the answer might be no, sometimes it may be yes. But nonetheless, it will definitely help you save.
7. Freeze Spending For A While –
No obviously not all spending, but rather all non – essential spending for a week, think of it as a challenge where you don’t spend a single dime of anything that is absolutely necessary. Doing this will give you control over temptation as well as help you find out how much you saved during that week which will, in turn, be a motivating factor when it comes to further weekly spending freezes.
8. Cut Down On Groceries –
You would be shocked to find out how many excess things, people buy on an average trip to the grocery store. A simple visit to purchase vegetables can end up with your purchasing biscuits, candies, soft drinks, chips and all such sorts of things that you didn’t require in the first place and soon you end up spending 2 -3 times more than what you would have spent if you only bought the things you intended in the first place. So, control your desires and temptations each time you go to the grocery store.
Pay in cash, whenever you pay with credit or debit cards, you do not realize the quantity of your spend, but whenever you pay with cold hard cash, you have a visual and physical value of what you spend and it is hard to part away with cash.
9. Control Your Desires –
The temptation is half the reason people end up spending so much. The best way to get rid of temptation is to wait 24 hours before purchasing anything based on impulse. Waiting for 24 hours does two things. Firstly, it allows you to think whether a product is actually worth the price, secondly sleeping can help you get rid of the temptation further helping you save
10. Punish Your Indulgences –
If, in case you do end up spending on any non – essential based on sheer impulse, then match that amount and immediately add that amount to your savings account. This will deter you from future purchases based on sheer desires.
It doesn’t take a genius to start saving money for the future, yes good mathematical skills are a plus. Nonetheless following these tips will help save money for a prosperous future, however, if things are hard, one can always use a financial advisor to help with their financial planning, to help their monthly budget and eventually even yearly.