Are you struggling with how to start saving? Or maybe you can’t keep up with your saving quota? Then this article is for you! We will go through the simple ways you can save today and keep up with your saving plans to reach your goals.
Why do we start saving in the first place?
When you start saving, you are one step closer to financial freedom! You build financial security for yourself. Besides that, saving can help you get your dream car or house faster, especially if you are not a five or six-figure earner.
To truly build your net worth and earn financial freedom, you have to design an investment or passive income portfolio. Saving a percentage of your income will help you get the capital to start investing.
So, how can you start saving without affecting your living situation?
Budget Your Savings
Absolutely! You need to include your savings in your budget every month. Decide the percentage of your income you want to save each month and add it to your expenses.
If you want to cultivate a good saving habit, then savings shouldn’t be an afterthought. If you plan to save what remains after sorting all your bills, you may not save, especially if you are an impulse spender.
Moreover, when you prepare a budget, you are sure of what you can afford to save. And you can also calculate the percentage of your earnings you can conveniently afford to keep.
Pro tip: You should remove your savings before you start sorting other expenses. That way, you can work with what you have left. And you are not tempted to “borrow” your savings to buy unnecessary things.
Find Ways to Cut Down Your Expenses
Let’s face it, some of your expenses are not necessary! And you can certainly live without them. If you’d like to start saving more, then you have to cut these expenses.
You don’t have to go out to eat out each night or buy that expensive designer watch.
Face it, unless you are into influencer marketing or sell your lifestyle, you don’t need to wear expensive accessories every time! Buying expensive things may be one of the reasons you have nothing left to save after each paycheck. So, let’s cut down on those unnecessary spending. Once you get into the habit of saving, you can calculate when you can afford to splurge or buy yourself something you like as a reward.
Furthermore, cutting down on expenses like eating out and buying lunch can save you money. Instead of buying lunch, you could pack yourself a lunch box for work. Alternatively, you can reduce the number of times you eat out per week. Instead of eating out 4 to 5 times a week, reduce that to once a week.
Pro tip: Calculate and document all your expenses in a month. When you document all costs, you can easily group your expenses to “needs” and “wants.” By reducing your spending on your wants, you can effectively cut down your expenses.
Give Yourself an Allowance
An effective method to avoid overspending is to give yourself an allowance. Allocate a certain percentage of your monthly earnings to spend every month.
Budget all your expenses based on that allowance. And you can save and invest the rest of your income. Moreover, this will help you cut down on unnecessary spending. However, for this to work correctly, you must be disciplined. Unless it is an actual emergency, resist the urge to spend above your allowance.
Pro tip: For this to work well, you must give yourself a realistic allowance. Make use of recommendations in the last section. Calculate your living expenses per month. Make sure what you allocate will cover all your costs. Also, make sure you account for miscellaneous expenses.
Set up Automated Transfers to Your Saving Accounts
Yes, automate your savings!
Suppose you are not confident of your commitment to saving every time. It would help if you automated your savings at a particular period of the month to a designated account.
Most banks offer automatic transfers between your checking account to your saving accounts. If your bank doesn’t have a savings account option, you can open savings accounts with an online bank.
Determine how much you want to save every month. Then, you can set up when and where your savings should go.
Alternatively, you can ask your employer to help you with this process. They can help set up a certain amount to go to your savings directly before you receive your paycheck. Ask your employer to see if this is possible.
Pro tip: Make sure you have the right tools for this to work. So, you need a savings account or Certificate of Deposit (CD). A Certificate of Deposits locks in your money for a certain period. And at a higher interest rate than a savings account.
Increase Your Income by Earning More
To save more, you have to earn more! There is no shortcut to that.
Look for more ways you can earn more money. You can either get paid more at work or take up a side business.
You can develop innovative ideas or work longer hours to get commissions, bonuses, and promotions. That way, you can increase your monthly earnings.
On the other hand, you can start a side business outside of your day job. An excellent way of increasing your income is to create an online business.
Online businesses are great because they give you the freedom to work anytime and anywhere. There are several online businesses you can start and run depending on your skills and interest.
You can freelance online—offer your skills to people and get paid. Or you can decide to set up an eCommerce store where you sell products. You can find out more about online businesses and how to start in our Entrepreneurship section.
Stop overthinking about saving, and start! You won’t know your saving potential if you don’t start saving. Take that decision today and stick with it. You don’t need to get it right the first few months as long as you are consistent and save something each month.
If you’d like to know more about saving effectively, keep watching this space for more articles in our saving series.