4 Tips On How To Easily Save And Manage Your Money
As a child, did you have a piggy bank? Whoever bought it for you was just trying to teach you how to save money.However, most people took this important life lesson for granted. They never saw the significance of saving the money because the parents could provide whatever they needed. It was not until they became adults that they realize that managing and saving money is an incredibly important!
Most of us adults today struggle to save money. The salary is never enough no matter how big it is, and most people end up borrowing before their next salary. Nonetheless, those who know how to budget properly find their salary sufficient. Below are some tips to help you manage your finances effectively.
Keep Track Of Your Expenses
The first step to managing your money and expenses is to track your money. Before you claim your salary, list your monthly expenses and allocate a budget for them. This may sound exhausting and time-consuming to do, but it will help you in the long run.
Tracking your expenses will give you an idea how your money flows, and you may be surprised at just how much money you waste. Also, you will see just how much you take for granted little things that cost around $10. You will be able to seal all the loopholes you create through poor budgeting!
Make a Budget
Now that you already have a general idea of how your money flows, you should be strict with your finances and make a budget. When making a budget, remember to allocate a portion of your income to your savings automatically. Just follow the formula
You have the freedom to determine what percentage to allocate to your savings depending on your lifestyle. For those beginners, we recommend at least 20 percent of your income to go to savings.
Set a Savings Goal
The best way to save is to set a goal. If you don’t have a goal, chances are, you will lack the motivation to save money. People have different goals in life, but you can categorize your savings according to your goals. These are:
Short-term (1–3 years)
- — Emergency fund (3–9 months of living expenses, just in case).
- — Vacation.
- — Down payment for a car.
Long-term (4+ years)
- — Your child’s education*
- — Down payment on a home or a remodeling project.
If your goal is to save for your retirement, start a business, etc., then we recommend you go beyond your savings and get an insurance policy or investment. This way, by the time you’re too old to do things, your savings will fund your lifestyle.
Get Your Priorities Right
Once you set your goals, decide on your priorities. Do you really need to buy a new set of clothes when you already have piles in your closet? Is buying a new model of iPhone worth it when you have a working Smartphone? Instead of spending on trivial things, why not set it aside for savings? Once you save, you will be able to buy all these things (and even more) in future.
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