As most people can testify, saving money is not as easy as it sounds. It takes a lot of discipline and a sound plan actualized daily. For some people, other than the usual monthly spending, they have debts to repay as well. The lucky ones might have taken loans from a licensed money lender in Singapore, where they are more understanding and responsible. The unlucky ones might be deep in debt with unethical and illegal money lenders who charged exorbitant interest and fees.
In order to improve one’s financial situation, they must put in place a plan that is realistic if they are to achieve their savings goals however small or large they may be. Here are some tips that can help one get started and maintain a habit of saving money:
1. Expense tracking.
Most people complain that even though they make enough money to meet their daily expenses and to save, they have no idea where their money goes to. Others complain that the money they earn is not enough. However, the best way to know where the money goes, and whether or not it is enough to meet expenses and save, is to keep track of all expenses incurred. One of the ways to do this is to download a spending up and record all spending, even for something as small as a piece of candy. It is also encouraged that one uses cash for all purchases because watching the money leave one’s hands causes them to be more cautious. By tracking expenses one is able to see where the money is going, and to identify where they can curb spending in order to find money to save.
2. Have a spending plan.
It has been said that if you do not plan, you plan to fail. If one does not plan on how to spend their money, chances of failing at saving for the future are high. A spending plan, also known as a budget, helps one to manage their expenses as well as cash flow. With a spending plan, one can assign money to various expenses and needs, with one of those being savings. Monthly expenses should be factored in as well as a discretionary amount for miscellaneous expenses that come up at times. Before getting started, check out useful home business budget templates to get a good idea about how to draft your spending plan.
3. Budget in savings.
Savings should not be relegated to what remains but should also be factored into the budget and taken off the top. One can then budget for expenses based on what remains after they have removed the amount they will be saving. The recommended starting point is 10% of one’s income. Once the 10% has been put into savings, the household budget can then be fitted into the remaining 90%. Of course, if things are very tight one can reduce that percentage. However, as things get financially better, it is recommended that instead of upgrading one’s lifestyle, a person saves all the extra money that becomes available to achieve their savings goals faster.
4. Have a goal.
If you aim at nothing, you will most likely hit it. Having a goal creates focus and a sense of purpose which in turn fuels one’s motivation to save. One can save a down payment for a home, save money for an investment, save for a vacation, for a wedding and so much more. Everyone should save for retirement and start early. By knowing what one is saving for, he or she can then put a savings plan on paper. This includes knowing the amount of money you need to save overall, have a timeline in place, and figure out how much needs to be saved every month to achieve the goal. One can also download a mobile app to help track their progress.
5. Prioritize.
To be successful at saving, one must prioritize the goals. This means looking at what needs to be achieved first and prioritizing that ahead of other goals. Where possible, one can work on increasing income, but it is often easier to reduce expenses and allocate the money freed to saving towards the goals that have been set. Most people find that they do better when they start by saving for smaller projects. As they achieve the smaller goals they are encouraged to save for the bigger ones. In such cases, they can prioritize smaller goals and work their way to bigger ones. On the other hand, one can look at their current needs. If the car one is driving needs to be replaced in the short term, they could start by saving for that, instead of saving for the down payment for a house.
6. Use savings tools that work for you.
Depending on what one is saving for, he or she must select the right account in which to save. One can choose to put money in a money market account, a fixed deposit account, a pension account and more depending on their needs and goals. Each account has its pros and cons and should be well thought out ahead of time. Other people may choose to invest the money in stocks or mutual funds in order to put the money to work as they continue to save.
7. Auto-save.
Automatic transfers will make saving a lot easier. By using this function, one can put money directly from the checking account into their savings account. That way, they budget on what is left without having the temptation to use the money they should be saving.
