For some people, saving money is a lot easier said than done. Other than living below your means, you can also save money by stopping the use of you credit cards, sticking with your budget or clearing all your debts.
It is imperative that you have a good income when you want to save some cash.
Have a fixed amount of money that will head to your savings
You need to make sure that you allocate at least 25% of your income to your savings. In fact, you need to make sure that there is a 1 year worth of emergency fund on your bank account.
Make a budget; stick with it
Once youíve reached the stage of balancing your earnings with all your savings goals and expenses, write down a comprehensive budget. This budget will clearly indicate how much money you can spend on any item or category of items. This is tremendously important for expenses which are difficult to restrict, or which tend to fluctuate. As much as possible, never exceed your budget.
Clear all your debts, immediately
When you sit down and calculate the amount of money you spend each month in servicing your debts, you will realize that eliminating all your debts is the swiftest method to free up money. This surplus money, freed from diverse debt payments, can easily be channeled to savings. Additionally, the quicker you clear your debts, the lesser interest youíll pay.
Calculate the amount of money youíll have to save
Determine the exact amount of money youíll need to save every week, every month, or every paycheck to achieve your saving goals. List out each item you want to buy and calculate how much you have to save for each one them. Ideally, itís advisable to save the same amount of money for each period. For instance, if you want to make a down payment of $12,000 on a home in 12 months (1 year), itís best to save $1,000 every month.
Live below your means
Record all your expenses, diligently
The amount of money you save in a month falls between two activities. How much money you earn is one of them. How much money you spend is the other. Itís wise to scrutinize how much you spend because this is easy to control. Start by writing down all your expenses. Carry a small notebook all the time for this purpose. Account each and every one of your expense. Do this week after week, and month after month, diligently.
Cut down your expenses; if necessary, drastically
After a few months have passed, take a critical look at your expenses account. You will find several unwanted expenses that could have been avoided. When you calculate how much all these avoidable expenses will add up to for the whole year, you will be motivated to avoid all unnecessary expenses altogether.
Set achievable savings goals Ė both short- and long-term
This will motivate you to save money regularly. If you are planning to purchase a house, calculate the down payment for the house. You can buy the house as soon as you save enough for its down payment. However, for long-term goals, like your retirement fund, youíll have to plan a lot more. Youíll have to calculate the amount of money you need every month for 20 or 30 years after your retirement.
Stop using credit cards
Pay for all your purchases and expenses with cash or debit cards. Never use credit cards Ė avoid impulsive purchases. Using credit cards may lead you to make impulsive purchases, or overspend.
Don't get fooled into believing you absolutely need the latest gadget, you don't
Learn to appreciate and enjoy simple things
Establish a clear-cut time-frame
For instance, you may decide to purchase a house in one yearís time. Set a specific date for attaining short-term goals, and ensure that the goal is achievable within the set time-frame. If itís not achievable, youíre bound to get discouraged.
Know where to invest
Investing instead of spending on things that will depreciate is one of the best ways on how you can save some cash.
Cut down on luxuries you don't have to have
Check prices for products
Buy something that you really need and not what you really want
Reassess your savings goals
Subtract your most essential and unavoidable expenses from your take-home pay. The difference is your savings. If you cannot meet all your savings goals, postpone or remove an item you donít need desperately. It could be a bigger TV or a bigger car. You can easily postpone their purchase by another year or two.
Get a good financial adviser
If you are getting a good financial adviser, you will be guided as to how you should be investing your money or saving.