Having to ability to save money better is a skill a lot of people wish to learn. For one, they might want to be more consistent in saving money. Some might be trying to save up for a big purchase and saving up for it. While others wish to be able to retire early and enjoy life while they still can. These are just some of the reasons why people wish to save money.
However, one thing you need to know is that saving money is a target which is easier said than done. It takes dedication on your part to consistently stick to you your plan month in and month out.
Start with a budget
As you endeavor to try and save money better, you always need to start with a detailed household budget. This is one of the financial tools you need to start saving money because how you do it and where the money comes from will be dictated by your budget. This is the first step as you try and strengthen your finances.
You might be having second thoughts and already convinced from the start that creating a budget is a complicated task. This is because you might have looked at how other people do it. You do not have to do exactly what other people are doing. The starting point in creating a budget consists only of two things – your income and expenses.
Start by making a list of your income making sure you include all sources of it big or small. You need to make sure that you do not leave anything out. Next is doing the same thing with your expenses. USA Today shared that the average expenses for one household total to around $67,801. One idea to try is to list down all your expenses in a month so you have a more comprehensive list. Include everything from big loan payments to your coffee runs in the morning.
Once you have both sides, always make sure that your income is more than your expenses every month. The extra money you have can be used to help you save money better. You can use that money in various ways. The important thing is that you do not waste it on unnecessary expenses.
Pay yourself first
As you try and save money better, you have to prioritize where your money goes. You don’t just put the money in a box inside a drawer in the attic. For one, inflation will catch up and decrease your saving’s buying power. BLS shared that the inflation rate for the past 12 months has improved to 1.6% from a high of 2.4% in 2018. It is also not safe to put away big amounts of money inside the house. If your house catches fire, then all your savings go up in flames.
When you save money, it is a good idea to pay yourself first. Much like how you pay for other expenses and debt obligations, you can do the same for yourself. You can include certain financial goals as part of your expenses which needs to be paid out every month. This helps you to be more consistent with your savings and ensures you slowly get to reach your goal.
If your target is to add about $1,000 in your emergency fund for the year, you can pay yourself about $100 a month. This will bring you over your target goal in a year’s time but this is a lot easier to accomplish rather than trying to look for $1,000 at the end of the year. You can do the same with other funds such as your retirement fund or even if you are saving for a house downpayment.
You can even have a fund you can use to help you upgrade your skills or even learn a new one. This will give you the chance to diversify your skills and increase your market value in your chosen profession. Choosing to learn a new skill will also help you look for new sources of income. Being able to diversify this part of your finances makes your income as a whole more resilient to economic shocks and other unforeseen situations.
Spend less than your income
To save money better, you always have to go back to your household budget. The idea behind managing your funds is to always make sure that you are spending less than what you are spending. If it is the other way around, you will find yourself in a debt spiral which will be hard to get out of. You will see your debt grow from one month to another until it starts to spread and affect other areas of your life.
If your budget shows that your income is bigger than your expenses, you can either maintain it or make improvements. You can identify ways to help you lower your expenses to help you stretch your income more. However, if your expenses total to a lot more than your income, you need to make find a way to change the dynamics of your budget.
The most obvious step you have to take is to look for ways to increase your income. You can start with your current job and identify ways to increase your pay. One is asking for a raise or trying to get a promotion. You can also identify income-positive hobbies which can help you bring in extra cash every month. Getting a second job is also an option as you try to increase your income every month. You just have to make sure you do not stretch yourself out too thin because getting sick can set you back in your goal.
Automate your savings
To help you save money better, you can use technology to your own advantage. There are various banking institutions that give you the chance to save money automatically. The way you do it is you allow them to automatically take out a certain amount from one account to another every month. It can be from your payroll or checking account going to one or more savings account.
This way, you can automatically transfer the amount you need to save for various funds every month. For one, it saves you time in trying to transfer different amounts to various accounts every month. It also helps you save money because even before you get any ideas on spending that amount on unnecessary items, it is already out of your account.
Identify areas to improve on
There will always be room for improvement and when you want to save money better, there are changes you can look into to help you reach your goal. You can always improve your household budget to streamline expenses and cut down on expenses. There can also be ways to improve your food budget. You can take out junk food and make sure you buy groceries in advance so you save on having to go on a food run every other day
Stay away from shopping sites
One of the ways to help you save money easier is to make it an effort to try and stay away from shopping sites. This is true especially true when you have an impulsive buying behavior. Staying away from shopping sites will help lessen the chances of spending too much on things you do not really need. It is also a good idea to opt-out of marketing emails by shopping sites as well. While you’re at it, do not save credit card details in your gadgets. Apart from online safety, it limits the chances you can easily check out items when you are online.
There are a number of ways to help you save money better and put you on the road to help you reach your goals in life. You get to enjoy life better and lower down your stress level knowing you are saving for the future.