Sometimes the hardest thing about money-saving is to find a way to get started. This article will guide you on smart ways to cut corners.
Many people spend most of their time and energy on earning more. But they forget that without learning the art of money-saving, it’s not possible to create a promising future for themselves and their families. There is no doubt that money plays a major role in our lives. For future needs, it works as a wealth creation tool and for fulfilling present needs, it serves as transaction instruments.
Simple routines that help in smart financial management
It would be really good if there were any magical formula or simple tricks that allow you to never have to worry about money or finance management. But it can’t happen in real life. That’s why there are some simple tips that you can use for managing your finances successfully.
For being good with money you don’t need to be a math expert. In fact, great mathematics skills are not really essential for saving money. You just need to have basic knowledge about addition and subtractions.
Life is much easier when you have good financial skills. Following are some tried-and-tested strategies that you use to make yourself financially more stable.
Let’s take a look.
Record Your Expenses
- The first and most important step to save money is to figure out how much you spend.
- Keep track of your all expenses which means every household item you purchase, or you go to a restaurant with your friends or family.
- Once you have all data, organize and categorize them properly so you have a clear picture of your expenses.
- This will also help you sift out the absolutely critical ‘needs’ from the optional ‘wants’. As a result, you get to prioritize your spending and become aware of potential expenses that can wait or be avoided altogether.
Make and Stick to a Budget
- If you don’t have a budget then the first thing you have to do is create a budget. Creating and sticking to a budget seems to be tough in starting but it pays in the end.
- If you have a clear picture of your budget in your mind then you will have control over your finances.
- For making a budget and better manage your money all you have to do is to understand your expenses and income.
Understand Your Income and Cut Back Unnecessary Expenses
- Most of the people know their monthly income but they have less knowledge of their expenses.
- Find out your total expenses and subtract that from your income. If you have a positive number then it’s really good. You can increase your savings or can increase your debt payments.
- If you are getting a negative number then it means you are spending more than your income. So you should cut back your unnecessary expenses.
- For example, if you have some bad habits like smoking you should quit it. Smoking is expensive and bad for your health. But, if you have an addiction to it you can make use of vaping as an alternative. It is much cheaper and less harmful than smoking and effective way to kick the smoking addiction.
Plan on Saving Money
- Now, you have a clear picture of your income, expenses, and a budget. You can now go ahead and set up a savings target.
- At least try to save 10% to 15% of your income. Consider money saving as a regular expense, similar to groceries or tuition fees for the kids.
Set a Financial Goal
- Setting up a financial goal is the best way to save money.
- So, start thinking of for which purpose you want to save money like for marriage, retirements, study or vacation and how long it might take you to save it.
- Take the advice of a certified financial planner for your short-term or long-term investment plans.
- If you have short-term goals such as vacation or down payment of a car then make use of savings account and fixed deposits.
- If you have long-term goals such as child education or marriage then makes use of investment products such as mutual funds or stocks.
Pay Off Debt and Set a Limit On a Credit Card Purchase
- While reaching towards financial goals, debt is a huge barrier for many. So, consider it as your priority for elimination.
- Establish a debt-elimination plan. It will help you pay it off more quickly.
- Also, limit your credit card expenses. Save up for an emergency fund to cover unexpected expenses.
Don’t Hide Money Under the Bed
- Once you have surveyed your budget, expenses, income, and found some ways to save money then start a savings account.
- Bank will not only give you a small interest but it will keep your money safe.
- Also, try to make saving automatic by splitting your direct deposit and setting up automated transfers between your checking and saving accounts.
Find Additional Income
- Another great way to save money is you can earn some extra money by taking up another job.
- For example, you can work as an online tutor or freelancer in your field to earn some extra bucks.
- You can even set up an online store of clothes or of any products. This extra income will help you when you need some quick cash in your hand.
Money can make or ruin your life. So, always have some sensible financial plan. Spend money wisely, invest it appropriately and always have a small backup for any kind of emergencies.
In a nutshell, no more than 1/3 of your net income should be used to pay off debt. Savings should be at least 1/3 the net income. It means the expenses should not go beyond the 1/3 net income in principle.
Debt paying, money-saving, and progress made towards your financial goals don’t have to be a difficult experience. Follow the above-discussed tips and invest in a great financial future, so that you will never have to be concerned about your finances again.