How to save your money
Many people have always wondered how to save money, but in time of the global financial crisis this issue becomes particularly urgent. You probably notice that sometimes you waste the money on different stuff and for this reason you can not buy something you really need. Following our advice, you will get to know how to save money which will be quite helpful.
How to budget your money
Having received your salary, the first thing you need to do is to assess the necessary costs for a month and to divide your money for different expenses according to the chosen strategy. There are many ways to budget money, and we will tell you about the most popular ones.
Actually the difference between the strategies of money budgeting consists in a percentage and the categories of your expenses. You get to choose the one that meets your goals.
The simplest way of budgeting is represented below:
- 50% - the needs. Half of your income you spend on various essentials: food, bills, clothing, different household stuff.
- 30% - the wants. This part you can spend on what you really want: entertainment, travelling, hobby.
- 20% - the future. This part may be considered either as a guarantee of your financial independence in the future or it can be used for buying a house or a car.
There is more detailed plan of budgeting:
- Regular expenses - 60%. This part is used to meet your daily needs;
- Pension savings - 10%. After retirement your income will be significantly lower, so it makes sense to save a small part of your salary every month in order to be able to lead a normal life in the future;
- Major purchases - 10%. It is used for the expensive goods buying: household and electronic appliances, furniture etc.;
- Irregular expenses - 10%. It is used in the case of emergency like a car damage or for making the gifts for some special occasions, etc.
- Entertainment - 10%. It is used for going out to theaters, cinemas, cafes and museums.
Another popular method of budgeting is called "The Jars Money Management System", where the jar is understood as some part of the costs:
- 55% - bare necessities;
- 10% - entertainment expenses;
- 10% - education;
- 10% - reserve funds;
- 5% - gifts and charity.
It is important to specify that if you have debt, first you should pay it off using the part of money designed for reserving. After repayment it is already possible to start to put money aside. As you see, various ways of budgeting are not that different. You can also create your own method that would reflect your goals and needs more accurately.
General money saving tips
Perhaps you noticed before that even having fairly good earnings, there is not extra money to be set aside at the end of the month. Often the reason for it is the petty expenses that are not that harmless, and they can be the stumbling block to the money saving. There are the general recommendations, which will help you to get to know how to save money:
- It is better to start the budget planning immediately after getting the salary. Later it may turn out that there is no money to put aside.
- Do not throw your loose change out, and put it into the money box. In such way, in a few years you will not even notice how you save a good amount of money.
- Do not make impulsive purchases. If you are interested in some expensive thing, do not buy it at once! And give yourself at least 24 hours to realize whether you really need it. Another way to assess the importance of the purchase is to calculate the cost of an hour of your work. For this purpose you should divide the amount of salary by the number of working hours per month. If an hour of your work is worth, for example, $10 and the price of a desired item is $50 - think whether you are ready to work during 5 hours to get this thing?
- Keep sales slips. This will give you a clear idea of what you usually spend your money on. Often, a considerable part of the income are spent on different stuff which is not important for you. It makes sense to stop buying, for example, coffee, cigarettes or fast food, and the money you usually spend on them you should put in a money box. The saved money could be spent on something that you always wanted, but it was not possible to do. By the way, this is an additional reason to give up bad habits.
- It is better to plan to buy clothes in advance: during seasonal discounts you can save a lot of cash.
- New Year and Christmas presents are should be bought during the whole year. So, you do not have to spend a large amount of money at once and experience pre-holiday rush.
- Before going to the store be sure to make a grocery list and take the exact amount of money you need for buying these products. In such way, you do not forget to buy something, and do not spend the money on unnecessary goods.
As you see, it is not difficult to learn how to save money. Following the mentioned recommendations, you can gradually develop the habit to keep the records of your personal finances. You should realize the importance of budgeting and other information mentioned above. Keep in mind, when it comes to financial matters there are no any trifles but details.