Saving more money is easier said than done. Right? Well, there is a certain effort involved. After all, it is more fun to spend money. However, if you want to secure your financial future, you have to learn how to save. It is not just about the money that you put aside. Learning how to restrain yourself when it comes to using your money is a good financial habit to develop. It will teach you how to keep yourself from overspending. It will teach you how to pause as you allow yourself enough time to make smarter decisions about your money.
This is what saving will really bring forth into your life. But then again, this is easier said than done. At least, this is true for those who hardly have any extra in their wallet. We all know that it is very difficult to save money if you earn the minimum wage. But despite that, nobody said that it is impossible.
The thing is, it is a must that we start saving as soon as we can. One of the goals that we need to save for is retirement. Unless you expect to work until you drop, you have to prepare for the time when you retire from your day job. And the amount that you need to save up for is huge. If you want to have sufficient funds, you need to have at least 10 times of your salary saved up for retirement. This is the general rule when you are saving for retirement. That means if you are earning $30,000 a year, you need to save up at least $300,000.
3 techniques to save more effectively
If saving a huge amount is hard, it is harder if you know that you have limited finances. But like we said, it might be hard but it is certainly not impossible. Fortunately, there are three techniques that can help make saving easier and also effectively.
Learn how to budget
The truth is, it is possible for you to survive without looking at a budget plan. But then again, the chances of your finances going all over the place is more likely to happen. It is more likely that you will forget to pay a bill because you ran out of money. Without budgeting, it is possible for you to forget to save because you used all your extra money on unnecessary expenses. According to studies, a huge part of the household expenses involves luxury items. This is true regardless of the household income.
Budgeting is the best way for you to control your finances. A budget plan shows your income and the various expenses that you spend on. This knowledge will help you make smart decisions about your finances – like saving more money. If you know that you need to give your savings a boost, you simply have to look at your budget plan to determine how to free up money to put into your savings.
While a budget plan can help you increase your savings, it can also help you commit to saving more money. It is easy to say that you will put aside a certain amount each month. It is another thing to really follow through each month. Self-control and discipline, if you are not used to associating them with your finances, can be really challenging. But if you include your saving goal in your budget and it will be more likely to be funded at the end of the month.
Think of it as paying yourself first
Nobody else will benefit from your savings but yourself. If you think of it that way, you will find that saving more money is easier. When you have the motivation to do something, it usually becomes easier to commit to it.
Take your retirement fund as an example. If you save for the future, your retired self will be the one to benefit from that. Some people might be tempted to rely on Social Security alone. But we all know that with the rising cost of living, a retiree cannot rely on their Social Security benefits alone. You need a separate fund to help tide you over when you retire.
There is also one thing that you need to do when you are implementing this saving technique. You need to pay yourself first. As soon as you get your paycheck, you have to remove your savings from it – immediately. When you don’t see it, you will not really miss. This is why you are encouraged to set up an automatic transfer. That way, the bank will get your savings before you can even withdraw the paycheck.
Spend less than what you earn
Finally, saving more money is easier if you just get into the habit of spending less than what you earn each month. Think about the opposite for a second. If you earn the same amount of money but you spend $3,100, where do you think the $100 comes from? That comes from debt. If you spend $100 more than your salary every month for a year, you will be burdened with $1,200 worth of debt before New Year. In case that debt comes with interest, you are in trouble.
This is why you need to spend less than your monthly cash flow. It is probably the simplest way for you to save more. If you earn $3,000 a month, make sure you only spend $2,750. The $250 will be considered as your savings. This will guarantee that you have extra money to put aside after every paycheck. This habit will also teach you other things about financial management. In the end, you need to realize that saving will not feel like a chore or a sacrifice if you just know how to manage your money well.
Tips to increase your savings
The truth is, saving more money comes easily for some people while for others, it may seem like trying to overcome a huge mountain. There are times when it is their habits and personality that makes it hard to save. This means no matter how much they earn, it will always be hard to save money. Of course, there are Americans who have a hard time saving because they cannot afford it.
Regardless of your personal situation, here are some tips that will help keep you motivated in increasing your savings each month.
- Focus on developing the habit. Some people concentrate too much on the amount they are saving. When it is too little, they end up feeling discouraged. If you focus on the saving habit, it will not matter if you save a big or small amount. Your goal is to save something each month – and that should be good enough.
- Treat it like a bill. It is more motivating to treat your savings like a bill. When you don’t pay your bill, there will be consequences. Consider your savings in the same light.
- Earn more money. Another thing that you can do is to simply earn extra money. Anything you save on the side should not be spent. It should be added to your savings account.
- Ask for benefits. Finally, you have to look for benefits whenever possible. The best place to start is at work. You should check if they offer health insurance so you do not have to pay for it separately. There may be reimbursements that you can do to lower your overall expenses.These benefits can help you save money in the long run.