Everyone wants to save money, but not everyone can do it. The reason being poor financial planning and lack of self-control. When we go out shopping or visit an online store, we get tempted by the offers being advertised there. Saving 50% on an expensive purse that you will not be using anytime soon is not really a wise strategy to save money. You are not saving 50%, you are basically spending money on something that you don’t need. So how can you save money? Read up to find out!
Start with a plan
Sounds basic, right? You know about it too. But what we are referring to here is not to make a plan that how you will be saving money on the month on monthly basis after deducting the expenses. What our meaning of plan is to identify what you “need” for the month and how much amount you should allocate to fulfill your needs. You may need groceries, pay utility bills, your loan repayment, etc. These are the expenses you must bear. But does dining out count as a need? Or going shopping for stuff you don’t need? Avoid doing that and in your plan identify how you are going to do that. If you are getting a $1000 worth of product for just $100, don’t buy it. Resist that temptation, because that’s where most people go wrong about saving.
Create a separate emergency fund
You don’t need to create a bank account for it. Just find a place in your home that only you know and start putting 3% of your total income there and don’t touch it unless it’s an emergency. Your emergency fund is part of your savings but it’s not. You don’t have to touch your savings or contact a bank for a loan in case of an emergency if you follow this tip.
Invest what you save
You are saving money but sometimes people do consider their savings as cash at disposal. They get to spend it however they want and although that is true it won’t help you survive the rainy days. Plus depreciation should also be considered. You may end up saving a million in two decades, but if you don’t invest that amount at an early stage the worth of that two million cash would depreciate. Property prices will go up or food may become expensive. So try to keep on investing whatever you save so that you get steady returns.
What happened to live on your terms?
Nobody would want to save their entire life only for their children to inherit that amount and they don’t get to live the lifestyle they want. What can be done in such a situation? Once you think that you have adequate reserves to support your lifestyle for at least a year and have a decent emergency fund, then after that realization live however you like. It is always recommended to continue adding more to your savings, but if that is not your cup of tea at least you can survive the rainy days without compromising your lifestyle.