Saving money is never an easy task. It requires so much more than just spending less and maintaining a budget, it needs discipline, wisdom and willpower to be successful at it. While doing so is always the wisest thing to do and often have long-term benefits, it still remains a challenge to most people to keep track their finances. If you’ve ever struggled with keeping your cash flow in the green, check out the tips below to help you.
Keep Track Of Your Expenses
Because it’s inevitable that you would shell out money for your basic needs, it is best that you record your cash flow. If you do not know where your money goes, then you would have a hard time saving it and sticking to your finance goals. It is also advisable to do this if you want to identify which expense eats most of your money that could be saved up.
Aside from the major things like bills and debt, you should also keep track of the minor expenses you incur to have a realistic idea of where your money goes. This requires discipline and keen attention to detail. If you struggle in these areas, keep a notebook or document where you could record all your expenses and purchases.
Set A Budget And Stick To It
Once you have identified where your cash is usually allotted to, it’s time to make the budget. This task might seem too meticulous or even a waste of time but if you are serious with saving your money and being wise in your finances, then this is a must.
You could start budgeting at every start of the month or even before you receive your salary as this could help prevent you from using it in useless purchases. Set a portion of your money for all monthly bills that need to be paid (i.e. rent/mortgage, utility bills), for grocery and basic toiletries, debts that must be settled. The remaining amount could be placed in an emergency fund or savings account.
Set Realistic Saving Goals
Yes, it’s nice to save up for a house, a car or a dream vacation but if you don’t put down a specific and realistic amount then it would be very difficult to do so. Always consider your goal and the time frame for it. Some goals might be easier to achieve while others could take years, or even decades to do so (house, car, real estate).
First thing that you should consider saving up for is an emergency fund for the rainy day. Have at least 6 months worth of living expenses stashed in your account in case of sudden events that could render you unable to earn any money (retrenchment, death of a loved one, sickness).
For short-term goals (vacation, automobile), write down the amount you need to shell out and the time frame you need it. Then check against your monthly savings. If your computation falls short than your time frame, it might be time to tighten the belt on luxury purchases such as coffee-shop coffee, that extra pair of shoes, the party dress and dinners out. Look for cheaper alternatives on things that are a must for you – brew own coffee at home, cook meals at home, wear an old pair of shoes or buy an inexpensive attire in a thrift shop. The possibilities are endless, you just need to be creative and determined.
Invest Wisely
While keeping your money stashed in the back is a good idea to prevent you from using it, you could also consider looking into retirement accounts (insurance) to maximize your youth and ability to earn. It’s never too late to think of your future as it would come and better be safe than sorry when it does.
Ideally, one must have 60-85% of yearly income for every year that you are retired to keep your living comfortably. Of course, this varies per person so take time to talk to your employer of human resources to know if there are options available for you with the help of your company.
You could also look at investing in stocks but be sure to research the kind of bonds and stocks you would get into to minimize risk. It is advisable that whatever you invest in the stock market is an extra that you have, not your main savings as there are a lot of risks involve in doing so.
