How to Save Money? – Learn To Start

Titus Ojo

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A lot of people who struggle to save from what they earn on a monthly basis believe there is a secret about how to save money.

This is more peculiar to those in countries where prices are highly unstable which affects the cost of living patterns, hence, weakens the ability to save.

It is undoubtedly that the key to savings lies in the ability to be disciplined and understanding of strategies to save.

Also, another delusion is that some people think until they have a well-paying is when they can save, rather than saving as little as possible. The act of savings has to be a conscious effort.

A well-paying job does not necessarily translate into the financial capacity to plan for things like a new car, investing in a start-up or even a vacation to a dream destination, with a higher salary, the taste is bound to change which leads to greater expenses. It is all about how much an individual is able to set aside to save from the monthly income.

There are some proven methods that I would like to share with as many that are struggling to save, especially those who are yet to start saving.

Start with 10% of Your Income

This is one very important principle if you want to understand how to save money. It is advisable to save about 30% of monthly income. However, for those who are struggling or just starting to save, start with at least 10% of your income.

Then, over time assess savings and scale-up when you are comfortable. Also, you must have a target once you get started.

Savings comes before spending

If you are the type that saves what is left after spending, you must rethink your strategy.  Spend what is left after savings and must not spend before savings.

It is pertinent to first set aside a certain amount you plan to save upon receiving your salary before spending, else, you may be left with nothing or less than what you planned.

How to Save
Image by Nattanan Kanchanaprat from Pixabay

Have a different account for savings or short-term investment targeted savings on auto-withdrawal

From experience and what most financial planning experts advise, the amount set aside for savings must not be in the same account that you purchase or incur expenses with.

Have a separate account for your savings. Such an account must be without a debit card, you can open a short term investment account as well.

Therefore, with a standing order or auto-deposit from your current account, that will save you the hassle of struggling with savings.

Differentiate Need from Want

I usually advise people to ask themselves a few questions before spending especially what they regard as a significant amount.

The questions are; Do I need this? Can it wait or not? Can I afford it? Are there alternatives?. Questions like this will help you to better assess what you intend to buy.

Understand that we have many wants as humans and we have scarce resources. Therefore, make purchases that are needed not wanted.

How to Save
Image by Bruno /Germany from Pixabay

Assess your spending

If you want to understand how to save money and make progress with your savings plan, assessing your spending is very crucial.

You can do this by tracking your expenses on a monthly basis. Filter them at the end of the month to take out the ones you can do without. This will better help you to prioritize your spending.

Start making a little adjustment

Little changes make a big difference, over time. Savings requires discipline especially making a little adjustment to your lifestyle, for example, if you are the type that eats out very often, I would advise you to start cooking and make eating out as occasional as possible and some other lifestyle that is deemed not necessary.

I must say it is not as easy as it sounds but it is worth it in the end.

 

Set a goal with your savings

This is quite important as you are not just saving for the sake of saving, there must be a purpose.

It could be to purchase a car, or towards education but make sure the purpose is clear, realistic, time length, and attainable. This will really help drive your intention to save.

Read Also: Basic Guiding Principles on Investing

The above methods are proven ways of starting meaningful savings. I would like to hear from you if you have other testable methods, please, leave a comment below.

 

 

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