If you are one of those people who live from paycheck to paycheck, it is time to take a step back and analyse your life. Saving money is a pleasant journey. You can start small and have a considerable sum saved up within a year. You may find it hard if you have a low income. But like many wonderful things, you will not know whether you can do it or not unless you take the plunge. Here are nine tips to help you to kick start saving from your monthly income.
The plan begins with taking a hard look at your situation. You need to have a clear cut idea about how and where you are spending your money before finding ways to save from it. Thinking about expenses is not going to work. You need to write them down. Take a look at the account statement from the previous months too. You will spot a lot of items that turned out to be the wrong choices in the first five minutes. They are not your goal. You made a mistake and learnt from them. The goal is understanding how much money you have spent on things that you really didn’t need or the sum of small expenses that you never realised.
Once you write down the expenses, you will spot how many bucks you spent on coffee every month. The money you spent buying coffee for a month is way higher than one day’s coffee. You are likely to find more than one such expenses in your account statement. Once you highlight them, find a way to eliminate them from your life. You can either replace them with a cheaper alternative or stop doing them at all. You don’t have to cut off habits like that in one day. You can skip coffee for five days and cut yourself some slack on the sixth day.
One of the perks of planning is that you get to choose what you want. You should categorise expenses. This will help you to decide what is best for you. You can indulge in some habits while making some categories lean. If you spend a lot on transport and dining out, take your pick. You can either walk a mile or cook at home. This is one step you need to be diligent in. And be realistic while prioritising as you have to follow it for a whole month. If it doesn’t work for you, switch the practices next month.
Saving money for the future is impossible with debts. As long as a good amount of your income goes into paying off the debt, it is hard to put money aside. When you are planning the budget, make tackling debts a priority, especially the high-interest ones. When you have to pay interest, financial responsibility is only increasing every month. Cut down every expense you can and use that money to tackle debts. And paying the EMI as soon as you receive a salary will make sure that you don’t ignore debts.
Once you tackle debts, you will have some wiggle room in your budget. You have to make sure that you are making the best out of the money saved every month. Take time to research and weigh your options. Find out which bank offers the best scheme and has interest rates. Ask your friends and family about fixed deposits. The fixed deposits will make sure that you are not tempted to spend the money. It will give you interest at the end of a period of time. If you are confident, explore the possibilities of investments too. But, be extra careful and rely on trusted credible advice while choosing a plan.
How often do you opt for online shopping? Often. Will you be spending so much money if you had to walk to the store every time you felt like buying something? The easiest way to cut down on impulsive shopping is to eliminate the means to do that. Start with removing all the card details you have saved on e-commerce shopping sites. If you have to take your debit card out of the wallet and enter the card number every time you order something, you are likely to feel lazy or put it off due to time restrictions. If you still cannot cut down expenses this way, take some harsh steps. Deactivate your online banking option, and you will be surprised how much money you save.
Consider your savings as a way of paying yourself. It is similar to paying the electricity bill and WiFi bill. Make it a priority which you cannot avoid. This will make sure that a certain amount of money is put aside every month. Once you decide to pay yourself every month, it will be on your budget like every other item. This will lower the chances of overspending. If you end up spending this money, you can take measures like creating another bank account or depositing it in a mutual fund. Cultivating this habit might be a little difficult. But, at the end of the day, you will find this ‘paying yourself’ act rewarding and delightful.
Save a fixed amount of money at the beginning of the month itself. Thinking that you will save the money that remains at the end of the month is the worst idea ever. The chances of any money left to save at the end of the month are trivial. Since you have decided to pay yourself, why not do it at the beginning of the month?
You need a goal that will inspire you to save money. No matter how big or small, dreams will keep you in check with your financial plans. It could be that backpacking trip that you have been dreaming for years or the latest gadget. Every penny that falls into your piggyback gets you a bit closer to your goal.