The earlier you actually start to save, the better for your personal finances. There are a few lucky ones taught and raised in ways that they learn the value of saving money at an early age but for the rest of us, saving has become a struggle. Credit cards also tend to encourage and cultivate a kind of mentality that makes you think it is okay to spend beyond your means.
Well, for obvious reasons, it is not.
If you are reading this, you might be thinking of changing that, or perhaps you’re simply wondering why you never seem to earn enough. You might be getting worried that 10 or 20 years from now, you’ll find yourself too deep in debt with almost nothing in your personal savings account. Don’t let that happen. It is never too late to start saving. Make saving a habit from now on. Here are some money-saving lessons to help you look at the bigger picture:
Earn More, Spend Less
Or simply do not spend more than you earn. You don’t need to do Math to see the truth in this. However, a lot of people just find it too hard to adhere to this basic principle of personal finance and are thus, unable to save. Stay away from the cycle of debt by regulating your spending. Leave your credit card at home if you cannot resist the call of temptation.
If there is an expensive item or a large purchase you wish to buy, save up for it or, better yet, find the extra income to pay for it. Instead of feeling guilty about a purchase made on credit, instead you feel good about it since it turns into a reward you worked hard for.
When you get your hands on some money, the usual thing you do is spend most of it on bills and expenses. Often, you only get to save what is left after you have made all the necessary payments, bought yourself a new pair of shoes, and treated yourself to a nice dinner—if there is anything left at all! You need to reverse this kind of thinking by setting aside money for savings first and only then can you spend the rest on your wants.
One principle you could try for yourself is the 80/20 plan for saving. According to this rule, 20% of all your income should automatically go to your savings. You are not to touch a dime of this portion under any circumstances. Put it in a savings account, forget about it, and do this every time you receive money. The remaining percentage you divide accordingly: 50% for needs and 30% for your wants. If you don’t want to be bothered with little details, this plan might work for you.
At the very least, set a fixed percentage for how much of your income will immediately go to your savings. Start with as low as 5% or 10% and keep increasing as you go along. Once you start making it a habit, you will find that the act of saving becomes much easier.
Budgeting as a Skill
Now if you think you can handle more detailed planning on your personal expenses, create a budget and do your best to stick to it. Calculate your total income including salary, bonuses, and loans, and make a list of every expense you need and plan to spend on. Sometimes, people tend to be surprised at how quickly their money runs out—not realizing that every small amount spent creates a dent on their wallet. An overall picture of how you spend your money will let you see what areas you could cut corners on and help you make adjustments so that you can actually have enough to put in a savings account.
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