A lot of people know the importance of savings, a few though walk the talk. The majority of people, even though they know how essential savings is, find it had to make a savings plan and sticking to it.
Many can’t just find that money to save even though they have a regular income with a payslip to show how much exactly they earn. You’ll find that most can account for their expenses, and this is where the problem arises.
You can’t find money to save if you don’t know how and where you spend your money. To save, you need to monitor and track your expenses. This is the work of a budget. A budget outlines your expenditure and shows you where exactly the money goes.
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For starters, monitor your expenses for a month. Track down every penny you spend and note it down. At the end of the month, sit down, and have an honest assessment of the ways you spend your money. This will help you make a budget.
First list the absolutely necessary living expenses like rent, food money, debt repayment, and utility bills. Next, jot down secondary expenses like subscriptions and entertainment expenses. Make a total of everything, if it exceeds your income then you are living beyond your means and you need to cut your monthly spending. Rework your budget until everything fits within your income. This is the first step to making your money work for you.
Cut unnecessary expenses
With a budget to guide how you spend your money, next look for items on the budget which you can cut off in order to reduce your monthly spending without making your life miserable.
Do you for instance need that monthly cable TV subscription when you are barely at home? If you are a frequent traveler, for instance, you can do away with most subscriptions and renew them only for the duration you spend at home.
Another good way to cut unnecessary expenses is to avoid credit card debt and ATM transaction fees. Instead of making piecemeal transactions every so often, withdraw the cash you need to last you at least a week. The savings you make on transaction fees will add up to hundreds of dollars at the end of the month.
Make savings a priority
Instead of saving whatever is left after your expenses, save first then budget with whatever is left of your income. Make arrangements with your employer or banker to have a percentage of your income automatically channeled into a savings account. This method works particularly best with people who don’t have the financial discipline to set some money aside for emergencies and the future.
Look for bargains and discounts
Bargains and discounts are a great way to cut your monthly expenditure without affecting the quality of your lifestyle. You are getting the same product but at a much lower price. Always look for discounts and bargains on items when shopping.