Whether you have been earning money for a while or just getting your first paycheck, the toughest hurdle to cross is saving- despite having heard how important this is from different sources. A lot of people do not apply the same urgency in spending when it comes to saving and this approach to handling money can be dangerous if left unchecked. Spoiling yourself once in a while is acceptable but a pattern of impulsive spending is nothing could turn into a financial disaster.
Saving money is about making simple changes to how you handle money with a view on improving the way you live later. How often do you reach the end of the month and realize you somehow managed to spend your savings? With the ease of payment these days, many people waste money they could have saved. The shocking part is they don’t stop there. Once limited resources have run out, people go on a borrowing spree and end up heavily indebted just to sustain their present lifestyle. That is not to say people should become miserly and deprive themselves of
basic luxuries. You deserve to spend money on things that make you happy but if you spend everything now, you may not be able to achieve your big plans.
The ultimate goal of saving is financial freedom- the ability to maintain your current lifestyle on your own without relying on someone else or a regular paycheck. Money may not solve all your problems but it is a useful weapon to have in ones arsenal.
How to start saving money
People are hesitant to save for different reasons- there isn’t enough to meet even basic needs or you convince yourself that you will do it at some unspecified time. There is always an opportunity to save. It is a matter of priority.
- Set goals and carry people along:
The first step is to identify why you are saving in the first place. Set a target and tell close friends or family about it so when you experience setbacks- and you will, you have a support system that keeps you accountable. Here are some goals to consider:
- Buying a house.
- Expanding your business.
- Tuition fees savings
- Retirement savings
- Split your goals into achievable plans
Once you have identified what your goals are, the next step is to determine how you will achieve them. By breaking them into bits, it becomes easy to stay on track and measure progress. For example, if you intend to buy a house in the next 3 years, it is important to figure out how much you need to set aside each month so you will be able to afford it when the time comes. And if you cannot save as much as you want to at first, start from somewhere and increase it later on.
- Reduce expenses
Initially, it may seem impossible to achieve your goals, but by making a few changes, you get a broader perspective of what the end result will look like. One of the ways to start saving more is cutting down unnecessary expenses. Make a list of all costs-fixed and variable costs. The next step is to reduce the expenses you have control over such as recreation expenses, feeding, and transportation and so on.
- Automate your savings.
Once you reduce your expenses, and have extra money in your hands, it is best to keep it in a safe place so you do not spend it. No matter how disciplined you are, the temptation to spend will always be there. Ensure that the extra money is deposited automatically before you have the chance to spend it.
With these tips, you will be able to save successfully!