What does the average person need to do to save more money?
Historically, Americans have not been good at saving money, but that has changed dramatically in the past few years. The economic situation demands that people learn to save money. We don't know what will happen in the world and how it will affect our jobs.
A very large portion of the population in the States is living paycheck to paycheck. They don't have the ability to set aside some of their money to deal with emergencies or to live out of work for a while.
What is the average person to do? Saving money is a very serious task, but if you take some measures, it becomes easier.
Record your expenses
When you realize you need to save money, first figure out what your expenses are. This means that you will need to count all of the money you spend. This includes absolutely everything. It doesn't matter if it's a mortgage or a cup of coffee in the morning.
Of course, it may not be that easy, and sometimes it may even shock you. It can be hard to even look at your spending figures. But you need to understand where your money is going so that you can send it to where it needs to go in time. For example, if you spend $100 a week on coffee outside the home, you can cut back on that spending and spend your money wisely.
Getting started doesn't have to scare you, the important thing is to take a few mandatory steps:
Check your bank and credit cards and statements to see what money comes in and what goes out.
Break down your expenses into groups. Most credit card statements already do this automatically. But if you decide to do it yourself, pay attention to the most important expenses that you can't pass up. This could be housing, food, transportation, or your utilities. Take into account even minor little expenses, such as the Internet or a subscription to something.
Nowadays, there are many apps to keep track of your expenses. Thanks to them, you can easily manage your capital and see how fast you are going towards your goal.
Now that you have the information, start making a plan for exactly how you will save money. Try to stick to your set budget.
Budgeting is necessary, but most people just can't stand the word.
We regard the word "budget" as the word "diet." Yes, it's absolutely necessary and if we give up a delicious burger once, it might help us in the short term, but we're not giving up burgers for life. This is exactly how the budget is perceived in our minds. We are willing to make that sacrifice for a while, but definitely not for life.
Try another interesting option instead. Create yourself an income and expense plan that is based on your goals. This will help you rethink the idea of the budget itself.
We always take great pleasure in saving money for some particularly important thing we've been dreaming about for a long time. We are willing to deny ourselves many pleasures in order to make the purchase we've been longing for.
Imagine yourself in the future, and realize what you would like to have in your old age. Perhaps you will realize that you want to save more so that you can have good money on top of your retirement.
Certain financial goals
You've already been through the hardest parts. Now you need to set specific goals that will increase your chance of success in saving money.
Ideally, set a small number of goals for yourself so you don't try to achieve everything at once. They should be specific and not abstract.
Be specific about the exact framework for your goal. Maybe you want to accomplish it in a year, or sooner? Maybe they will be small goals that you can achieve each month?
Don't be afraid to use other people's experiences and your own financial data from previous years. After all, wise men learn from the past.
Once you can decide what you want, write it down. The goals we only think about are just our fantasies.
Pay for yourself
The "pay it yourself first" method is considered one of the most effective ways to ensure that you make your contributions every month.
This method is that you will not try to skip a contribution and spend your money on something other than those savings. Savings contributions will help you accumulate a certain amount of money and build something long-term.
Automatically sending your finances to a savings account is the most common example of "pay it yourself first." Basically, financial experts recommend spending 20 percent of your paycheck into such savings accounts. Of course, this may be too much for some, then try to choose the optimal percentage yourself that won't hit your comfort level too hard. Even if it is a few percent, it is in any case better than nothing.
Finance is a game
Gamification is when you can add some game elements to various life processes. Winning, competition, and points are all used in different areas of business, marketing, and in many applications on the Internet.
Does it make sense and be effective when we're talking about our personal finances?
At the very least, it would make the process of saving money fun. It's not a bad way to track your personal progress.
There are various calculators that can visualize your savings and this will show you how they are growing. Sure, it may not be very fast, but sooner or later it will build up to some serious scale.
The "snowball" method
Let's be realistic. It's very hard to get out when you're swamped with credit and it keeps pushing down on you. Sure, proper budgeting can free up some finances for you to throw at paying off your debts, but you need to choose the right method to solve your problems.
We can approach paying off our debts mathematically. Analyze your loans and choose the ones with the highest interest rate. Pay the minimum balance on each, and try to pay off as much as possible of the very debts that have the highest interest rate.
In fact, it turns out that this method is not particularly effective. The best approach is the "snowball" method. This method assumes that you will pay back the smallest debt, no matter what the interest rate is.
If you focus on paying off your smallest debt - your progress will go faster. Consequently, you will get much more satisfaction after reaching your goal. Your motivation will grow as you see your debts disappear.
Everyone has some kind of necessary expense. How hard it can be to spend your own hard earned money on the usual trivial necessities like: insurance, food and rent. After all, we need that money so badly in other areas.
In fact, there are many interesting and even fascinating ways to reduce your monthly expenses on necessary needs. Ask your older acquaintances and grandparents. Chances are these people know how to save money much better than you do.
Set yourself a system by which you store. You don't have to come in for coffee and come back with a cart full of junk. Take advantage of various coupons and discounts to buy groceries cheaper.
Ways to spend less
In addition to cutting your expenses overall, consider simply spending less money. Try buying used items instead of new, use the library when you need to learn something new. Instead of going to a coffee shop, suggest that your friends come to your house.
Never forget what you can share with your friends and acquaintances. If you have a book you don't need, offer it to your acquaintance. Perhaps he or she might have something new for you? Use this method with clothing or even with subscriptions to various online resources.
As long as companies like Netflix aren't prohibiting us from doing this, why not take advantage of these opportunities?
Of course, if you work full-time and have kids, it's unlikely you'll have extra time to drive an Uber and make money that way.
However, you shouldn't forget about the many other options for earning money. You can find your old clothes or some collectibles and send them for sale. Consider renting out your spare room to lodgers. Perhaps your acquaintances need some services and you can cooperate profitably.
There are many ways to make money online, especially if you have any special skills. If you work with video, find a part-time video editor. Try writing articles or drawing pictures.
Money Dates Every Month
Even if you've already done all of the above, you still need to check your money. What for? Because you always have to make sure you're moving in the right direction. You need to know that your efforts are not wasted and that you are on the right track. This will allow you to identify any problems, so that you can deal with them with minimal damage to you and your finances.
Designate a day for yourself that will be your "finance date." This is the day you can make a good dinner and make it special. Review your finances, analyze your progress, and reward yourself by watching a movie or playing a game.
Was this article helpful?4 Posted by: 👨 Jeffrey T. McAnally