We all know that it’s very easy to spend money than to save it. Moreover, what is more, difficult than saving money is where to get started?
Saving money and pursuing your financial goals can be different things for most of us. But there is a strong bond between both. Once you start saving money and prioritize on your goals, you can utilize the money saved to pursue your financial goals. To get started, you might look for simple ways to save money. You might have heard about this from your parents asking you about your expenses from your pocket money and to cut down on unnecessary expenses. It would have been annoying when you were young but when you look back and recall those times, you would understand how you were being prepared for finance management. Let us start with some simple tips to manage our finance better.
We share with you 8 simple and effective tips to help you get started with money saving.
8 Money saving tips:
Learn to manage your finances well and start with these 8 simple steps towards the journey of saving money.
Tip #1. Track down and note every expense you make
The first and most important step towards saving money is to know where your money goes at the end of the month. Simply start tracking every expense you make on a weekly basis and analyze your spending habits every month. You must include even the smallest expense you make be it a cup of coffee, newspaper, magazine or groceries etc. Additionally, you can even analyze your bank statement or credit card statement on a monthly basis. If it’s difficult to pin down every expense then use the apps available to scan and record your expenses.
Tip #2. Organize and create a budget
Once you have the expense list then organize your expenses and create a budget. A workable budget would match your expenses to your income and highlight the areas where you’re overspending. Also, include the regular expenses in the budget such as your car maintenance, rentals etc.
Tip #3. Add a category in your budget: “saving money”
Along with the expenses you need to add another category in your budget for “saving money”. Just like how you spend money on various stuff, you can spend some on your savings as well. The only difference is that this money you spend on your saving is going to come back as double or same depends on how you save it. You can try to put at least 10 to 15 % of your income towards your savings. Identify the areas where you can cut down and put that money towards your savings such as movie every Friday, candlelight diners etc.
Tip #4. List your goals to save for
It becomes easy to save money when you have goals to save for. List down the goals you wish to save money for such as a down payment for a house or car, a vacation to your dream destination etc. You can even define a period for which you need to save for your goals and divide the goals into short-term and long-term goals.
Short-term goals: down payment for a car, vacation etc.
Long-term goals: Retirement, for a child’s education etc.
Tip #5. Prioritize your goals
Once you have listed down your goals, you’ll have to prioritize your goals and save for it accordingly. Prioritizing your goals plays a vital role in your savings plan along with your expenses and income.
Tip #6. Save at the right places with right tools
There are different ways you in which can save your money and it depends on the type of goal: short-term and long-term goals.
Consider the below options for long-term goals:
• Securities: Mutual fund or stocks (investment comes with risk and thus do a thorough research before you go for it)
• FDIC insured IRAs
Consider the below options for short-term goals:
• CD or Certificate of deposit
• Regular savings account
• High-yield savings account
• Bank money market savings account
Tip #7. Opt for automatic monthly saving option
You can opt for automated transfers between your checking and savings account which most of the banks offer. You can set the settings of amount, date and account to save money. In general, automatic savings is a good option as it saves you from temptation.
Tip #8. Track your progress on savings
Tracking your progress keeps you motivated to see the amount saved in your account. It will also ensure that you’re on track with your personal savings and fix it when things go wrong.
Get started with saving money by following the above tips and see your savings grow. If you’re focused towards saving for your goals, the process will get easier.
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