Saving is a little bit like planting trees. As an old Chinese proverb says, the best time to plant a tree was twenty years ago, the second-best time is now. The same applies to “saving”, if you haven’t started yet, the best thing you can do is to begin just after having finished reading this blog post. Here we have made up a list of six basic tips and suggestions to get you started in the right way.
1. Track your expenses
Tracking your expenses is important in many different ways. It can help you stay away from impulse expenses on things or services that are not that useful to you after all. It can also help you with seeing the bigger picture of your day-to-day expenses, from food to transportation, to your house bills, your mortgage, as well as for all the recurring charges related to monthly subscriptions – for all those services that you use, like Netflix, HBO, Spotify, Amazon Prime, and so on. Being aware of the way you spend your money is the first way to better plan your priorities and start to put a bit of cash apart. This way you’ll also be able to prioritize your spending.
2. Get serious about having a budget
This can be your next step after that you understood a little better the way you spend your money. A popular way that people use to make up a budget is the 50/20/30 rule, which basically consists of splitting your after-tax income, by allocating 50% of it on the needs, which included all the essential costs for your “survival” – food, bills, etc., another 30% on wants, which basically includes all things that are more superficial like events, vacations, gadgets or that new pair of shoes that you saw on Instagram, while keeping the 20% of what you earn and allocate that to savings. Easy, isn’t it? There are also other budgeting methods available, all you need to do is pick yours.
3. The 24-hour rule
That’s a very straightforward point – every time that you think or see anything that you want to purchase, you should wait for at least 24 hours to let the dust settle, before making a decision on actually buying it. This way you can reflect more on your own impulses and avoid unnecessary purchases. This rule can also come in handy to help you categorize the costs in sections discussed above, by asking yourself a simple question: is this something that I really need, or is it rather something that I want?
4. Choose something to save for
It might get a bit boring and not that motivating to just save money for the sake of it, right? So, the trick here is to set specific goals, in order to have an actual reason to put the money aside. Examples here can go from long-term things or experiences you want to buy, like a house (it also applies if you think about getting rid of your mortgage faster by paying it faster), that round-the-world ticket you always wanted to buy, a sailboat for all those amazing summers, a cool new bike for your daily commute, or even something for your future – university tuition fee, for example.
5. Create an emergency fund
An emergency fund is an amount of money that you want to put aside for when something totally unexpected, and expensive might happen. It’s a reserve of money that you can use when your car needs a major repair, when the air conditioning system of your house stops working in the middle of summer, or when you have some unexpected medical bills to pay. You can start small and grow it from time to time. In case if you are a freelancer, it would be very useful to have a security cushion for at least 6 months, enabling you to survive if things go south. This will give you peace of mind even during difficult times.
6. Make it effortless
Technology is here to make our lives easier, so why not take advantage of it? There are so many fintech apps out there that you can use for your own financial benefit. With such apps, you can make all that saving project a whole lot easier. For example, there are apps that automatically round up the amount you spend, by putting aside a certain proportion of your daily expenses. You’ll save a nice sum of money in no time, and it will all happen without any particular effort. After seeing first solid results, you may want to consider investing your savings to make it grow. Believe it or not, but even investing can be fully automated and easy.