Saving money is not an easy task to accomplish. It requires a lot of preplanning, willpower, and the ability to maintain a firm distinction between wants and needs. Unfortunately, many people end up spending the disposable income that they should be saving for things that, at the end of the day, are not essential.
Here is a list of ways which will force you to save money.
Step One – Pay Yourself First
One of the easiest ways to begin a savings is to open an interest bearing savings account and deposit 10% of your paychecks into it immediately. Even better, have an automatic transfer on pay days so that you won’t even see the money coming out of the account. If you don’t touch the money and leave it in a high interest savings account, you could amass quite a fortune due to compound interest.
Step Two – Create a Budget
Create a budget with outlines the following: total monthly income, all fixed monthly expenses, and all variable monthly expense budget limits. Take out all the money you will require for your variable expenses and put it into glass jars with the expense clearly labeled on it. When you need to purchase something, you will need to take it out of the jar so you will be able to see the money that you are using and how much you have left.
Step Three – Don’t Use Credit or Debit Cards
Avoid using credit or debit cards for any purchases because you do not have a real-time view of your account balances and it is very easy to underestimate how much you are actually spending. This directly relates to having your money in cash form so you can see it dwindling and can put limits on what you are spending.
Step Four – Trim Expenses where Possible
If you notice that you are consistently going over in certain areas of your expenses, you are going to require a little readjustment of your current expense limits. The whole point of budgeting is to be able to free money to save. Sometimes, you are going to need to cut back in certain areas to help out in others.
Step Five – Pay Down Debt
The best way to free up more extra money is to allocate a larger portion of your budget to paying down debt. High interest rates often come with credit card debt and that can amount to extra thousands of dollars of money that you don’t have being paid to credit companies. Get rid of that debt as soon as possible to take advantage of saving as soon as possible.