Sometimes the toughest thing about saving money is just getting started. It’s no-brainer to treat money the right way but many of us fall short due to the lack of discipline and procrastination. The good news is, with a deliberate action plan and a forward change in mindset, you can easily build these good habits into your day that will lead to a positive financial life.
If you want to succeed in saving where most people fail, start by following these simple rules:
1. Consider recording your expenses
The very first step is to determine how much you are spending. Keeping track of your expenses means every newspaper, coffee, and snack you purchase. Cultivate a habit of accounting for every dollar spent on a daily basis. There are tons of available Apps in the marketplace to help you get organized so leave your pen and paper at home. Choose an App that also allows you to arrange your expenses into categories such as mortgage, groceries, and so on. Or better still, create and personalized your categories to record more relevant expenses.
2. Make a budget
When you have a clue of what you are spending on every month, start organizing your recorded expenses into a workable budget. Your budget must outline how your expense measures up to your income, so you may plan your spending as well as to limit overspending. Aside from your monthly expenses, see to it that you factor in the expenses that occur on a regular basis, yet not every month, like car maintenance.
3. Take smaller steps to save at a start
Now that you have made a budget, create a savings category within that. Try putting aside 5% of your income as your savings for a start and increase it gradually over a period of time. By doing so, you are guaranteed more success when you set smaller and consistent goals. Bear in mind that it can be a lot harder at a start if you plan to make huge adjustments in your lifestyle by committing to save a quarter of your income or more.
4. Determine your priorities
If your expenses are way above your budget, it could be the best time to cut back. For you to do this, determine the non-essentials that you can spend less on, like dining out and entertainment. Your goals will likely have the biggest effect on how you can save money. Make sure to take note of your long-term goals. It is crucial that planning for your retirement does not take the back seat versus your shorter-term needs. Prioritizing your goals may provide you a clear idea of where to begin saving.
5. Pick something to save up for
Probably, the best way to save money is by setting goals. Start by knowing what you are going to save up for. It could be anything. It might even be your budget for a vacation or down payment for your house. Then, determine how long it takes you to save up for it. You may use a savings goal calculator for you to know the time frame. Just remember to separate your short-term and long-term goals. Some of the long-term goals include your child’s education, retirement, a remodeling project or down payment on a home. The short-term goals can be your vacation and emergency fund.