Saving money is an essential part of life. However, it is definitely not easy for everyone. While some don’t have enough privilege to take out a part of their income, others just don’t know how to do it. Nevertheless, savings help you in rainy days and every individual must have savings. The amount of savings per month is not fixed as a lot of factors affect that decision but 10% of every month’s income is a good enough amount for the longer run. If you are just beginning in this, here are some tips to save money for a secure future.
Save or Invest?
First off you will need to understand the difference between saving and investing. Both are completely separate things and have importance of their own. Savings are more beneficial for short-term goals or emergency situations. Whereas, investment makes your future stronger and determines how wealthy you are. You cannot ignore any one of them for the other because both play a vital role in a settled life. However, dynamics for both can be different.
Record your expenses
Recording your every single expense during the month or week is an important part of savings. Some people have a monthly tracker while some are more comfortable with weekly tracker. Nevertheless, write down every small or big purchase. Whether it’s a coffee jar or a home appliance. At the end of the month you will be able to calculate your total expense. Knowing how much exactly you are spending over a month will give you clarity of how to move forward.
Make budget
Budgeting is one of the most important tips to save money. Write down all the essential expenses that you have to make. It usually includes utility bills, groceries and some other expenses like traveling and eating cost. After that goes in anything added which you like to do and is not an essential. It includes dine-outs, renovations, and partying etc. It not only helps in saving money but also prevents delay in monthly payments.
Cut down on expenses
Once you have the total expenses in front of you, try to look out for any unnecessary expenses. Or something which can be omitted. For example, if it is possible to walk instead of taking the bus, try doing that. Similarly, unsubscribe from any subscriptions that you are not using and especially if they are on auto renew. You don’t realize how much unnecessary money we pay to subscriptions that we don’t even use.
Prioritize and compartmentalize
One of the easiest tips to save money is make different compartments of savings. For example vacation, new car, new home, renovation or any such big or small goal you are trying to achieve. It helps in motivation as well as achieving all your goals. Moreover, this way it is easier to save money and you know how much to put in compartment. Maybe one of the goals is more important than others so you can put greater chunk there. Conclusively, this is the best strategy to gain financial independence all together.
Set a goal
Not everyone has in them to save money just out of habit. In such cases, it is important to have a goal for which you are saving up money. The goal will keep you motivated and push you towards achieving it faster. When you are able to look at the destination, you try to walk faster to reach as soon as you can. Just like that having a proper goal helps in saving money quite a lot. However, saving for emergencies is different. It is the amount saved in an easily accessible account to use whenever there’s an unforeseen situation.
