If you’re not already saving a certain amount from your earnings, it might be a good time to start. We understand that it’s not easy: You’ll need to accustom yourself to saving regularly, all the time, and that’s probably the hardest part. There are ways, though, that you can get used to it faster.
Start keeping a budget
Keeping track of your income and expenses will allow you to better understand where and how your money goes, and therefore help optimize your spending. After such optimization, you will likely start to have more available funds and you will be able to start saving. A budget is considered the foundation of financial literacy for a reason: it teaches planning and accounting, and teaches you money management skills.
Write down all your debts
It is very important to have all debts under control that you have. For example, you can take a notebook and write down absolutely all (large and small) debts. Then calculate your income level. By comparing these two numbers, calculate how long it will take you to pay off all your debts. Also, don’t forget to use a credit card ratio calculator if you have credit card debt (example https://myfin.us/calculators/credit-card-utilization-ratio).
Often people can’t learn to save, because they form savings on the leftover principle: they send everything left at the end of the month to the piggy bank. But if a person doesn’t save, they are more likely to spend it all. So try to make savings a budget priority: on a par with the payment of financial obligations, or at least with the obligatory expenses. In other words, it is better to allocate a certain amount in the piggy bank immediately after you receive your salary, not when most of it has already been spent.
Make a savings account
Of course, you should not keep the savings in the same place as the basic funds: it’s so easy to get confused. We recommend splitting the amount: keep some of it in cash, and send another part to a special savings account. Almost any bank has such proposals: savings accounts, often with interest on funds lying there. Withdrawing from such “piggy banks” is not profitable: for example, you lose the interest. This gives you an incentive not to spend your savings unnecessarily.
The easiest way to learn to save is to put a certain amount into a “piggy bank” regularly, e.g. after every paycheck, depending on your capabilities. If you want, you can do it yourself or set up an auto-payment through a banking app. The size of this amount is determined individually: it may be 5% or 20% of your salary. The main thing is that you should be able to survive the coming month with your remaining funds, without any problems, while paying all mandatory expenditure items.
Understand why you need it
Always remember why you need savings. Don’t just save for nothing. Keep in mind that the accumulated amount of money will serve as a safety cushion or an opportunity to buy a long-awaited and very valuable item without loans. Set goals and follow them: this increases your motivation.
Limit access. Try to organize your piggy bank so that it would be inconvenient or unprofitable for you to get money out of it. Make it an account that takes a long time to withdraw or deprives you of interest on the balance.
Planning. If you focus on major purchases in advance, the need to withdraw money from a savings account in a hurry will disappear. Of course, no one is immune to force majeure – but sometimes for them savings and need.
It’s wise to save
No, it’s not about denying yourself everything. Prudent savings is part of financial literacy, and it is primarily about spending money to your own advantage. For example, not to buy some thing in a store with a large markup, if you can get it at a discount in another network. Or carefully study the reviews and characteristics of a particular product before you buy it: perhaps there is something more profitable and better. In favor of savings, you can give up small, unnecessary expenditures. For example, if you prepare food for work at home, rather than using restaurants, you can save a significant amount. It is better not to spend it, and put it aside so that in the future you can afford a major purchase.
Use the 10-second rule
If you see an interesting product, walk away from it and wait 10 seconds to see if it is that good. Often the first impression passes, and you stop wanting to buy it. If it’s a big purchase, however, you can extend it to a few days or even a month.
Look for ways to make money
If you can’t save no matter what, you might want to increase your income. We get it: it’s not easy to do, and everyone’s situation is different. Look for ways: perhaps freelance work or investing your existing savings in conservative financial instruments with a low but stable return can help you. Do not worry. You can always find a way out. And if you combine the search for additional sources of income with advice on financial literacy, it is not as difficult as it seems. And soon you will be able to save.
Be that as it may, the basic condition for successful savings is regularity and discipline. Even if you save a little, but constantly, you can accumulate a substantial amount. And this is an opportunity to be protected if something goes wrong, to afford the long-awaited purchase or avoid a loan. Remember: everything is in your hands.