They say that saving is the path to fortune, and that could not be truer. Having a safety net can help us face bad financial times by investing or planning for the future. That’s why in this article, we’ll discuss how you can save money every month. And later you can use it as you see fit!
Why saving money is a good idea
It’s important to always have a little money put aside that can help you during an emergency, for a good business opportunity, or extra expenses. Many people live on a day-to-day basis and are a month away from bankruptcy if they lose their job (beyond any compensation they might receive).
Not everyone makes a habit of saving and even worse, they don’t know about its advantages. At any moment, something unforeseeable could happen that would require cash to be used. How would you deal with that if you only have debt and maxed out credit cards?
And besides that, saving money is synonymous to planning for the future. Maybe you’re someone who “lives in the now”, but you should keep in mind that although things are well now, tomorrow could be a different story. You should always be prepared.
By that we don’t mean that you should stop enjoying anything. What we do mean is that additional and unnecessary expenses should be the exception more than the norm. There are many expenses that impact our ability to save: vacations, eating out, weekend getaways, and clothing.
We also spend a lot during sales seasons, when there are a lot of discounts in our favorite stores, and when we’re bored. To avoid reaching the point that you have to cut back because of external factors (for example, price hikes in utilities), it’s a good idea to put a little money aside every month.
Tips for saving money
On the one hand, it’s about being better organized or smarter and on the other, it’s about letting go of certain “treats” we buy to fill a gap or bring us happiness for a short time. Cutting back on clothing, shoes, or nights out can really help save money. Here are some other recommendations:
1. Write down your expenses
One of the best ways to save money is by being aware of your spending habits. You can do this by writing down every little thing you spend money on during a month. After shopping or paying bills, write them down in a notebook or Excel spreadsheet.
Make sure your notes are detailed so that you can notice where most of your money is going—coffee on the way to work, lunch at the office, hand cream, or taxi fare. Once you’ve identified where you spend your money, you can eliminate any unnecessary expenses. You could make coffee at home or take it with you in a special mug. Also, you could prepare your lunch the day before instead of buying it at the office.
2. Set a budget
If you’re in charge of shopping and paying bills at home, you should know approximately how much you need every month. Take all of your fixed expenses into account and don’t go over the maximum allowed. Of course, there can be changes; for example, if your electricity bill went up, you can reduce your power consumption by using the lights less often or doing laundry only once a week.
A budget helps us in many ways, since it shows us how much we spend and gives us a limit on how much we can spend. Add up how much you spend on food, transport, and utilities—the three pillars of household spending.
3. Setting money aside
One of the main mistakes people make when trying to save money is paying all of their bills and expenses and then setting some aside if there’s anything left. However, most of the time this strategy leaves us with very little to put into savings.
It’s recommended that you save about 10% of your wages—and to make sure it gets where it needs to (safe deposit, under your mattress, or invested)—it should be put aside as soon as you’ve been paid.
Another thing: determine what situations or purchases call for taking money out of your savings. For example, medical emergencies, car problems, emergency house calls, etc. Saving money doesn’t mean spending it on anything and everything; otherwise, you’ll never get ahead.
4. Lower your expenses and debt
This step is crucial for improving your finances and to be able to plan your future. As a first step, we recommend that you stop paying the minimum amount on your credit card and that you try to get ahead on your personal loans. This way, you can avoid going more into debt because of interests or penalties.
Secondly, it’s very important that you lower your monthly expenses. Do you eat out every weekend? Go out only once a month. Do you buy clothes every time you get paid? Only buy clothing for special occasions, like for your birthday, for example. Do you travel every holiday? Maybe you should stay home once in a while.
This way, your finances will be a little “calmer” and you’ll be able to save money.