We are told it is the most important thing to do in life. Save your money. Finding that balance between saving and spending is a major challenge for most people. How much of each paycheck do you save? How much do you spend? How much do you invest? There is plenty to think about when it comes to saving money and we will dissect it all in this article.
It is important to have a method when it comes to saving money. There is plenty of books on the market which offer advice. One notable one is The Barefoot Investor. It focuses on aligning your expenses and ensuring you are saving money at all costs. Other methods may revolve around what you get paid. I once heard a former professional footballer who played in the English Premier League say when he was on 60k a week, he would save 20k, spend 20k on rent and spend 20k on a day to day life. On face value that is not the best strategy as there is a lot of unnecessary spending. It comes down to how you are willing to live. If you are on 200k a year, you may be more inclined to spend more on a nice living situation. It makes sense, but there is the option to live more modestly to save money. These are just a couple of conundrums that come with saving money.
1.1. Record Expenses
The first step towards starting to save money is figuring out how much you are spending. Keep track of all your expenses — meaning all coffee, household items, and cash tips.
Organize the numbers by types, such as petrol, grocery stores, and mortgage, until you have your details, and sum each volume. Use your credit card and bank statements to ensure that you are accurate — just don’t worry about everything.
Tip: Seek a free-spending tracker to help get you started. Choosing a digital program or application can help to automate some of the work. Bank of America consumers can use the Spending & Budgeting tool, which conveniently categorizes the purchases in the smartphone app or online for simpler budgeting.
1.2. Budget for saving
When you get an idea of what you’re spending in a month, you can start arranging your reported expenses into a workable budget. The budget will detail how the spending scales up against your income — so you can schedule your expenses and reduce your over-expenditures. Make sure you are factoring in costs that arise frequently but not every month, including vehicle repairs.
Tip: Include a category of savings — to save 10 to 15 percent of your income.
1.3. Find Ways to Cut your Expenses
When your budget is so high that you can’t earn as much as you would like, it might be time to cut back. Identify non-essentials such as entertainment and dining out that you can spend less on. Look for ways to save on your monthly fixed expenses like TV and cell phone too.
Here are a few suggestions for cutting everyday expenses:
Using tools including directories of civic activities to locate free or low-cost activities and reduce the budget on the entertainment.
Cancel subscriptions and memberships you do not use — especially if they automatically renew themselves.
Commit to eating out once a month, and try places that fall into the category of “cheap eats.”
Give yourself a “period of cooling off”: Wait a few days when tempted by a non-essential buy. You may be happy to have passed it — or ready to save it up.
Now, investing is the big-ticket item when it comes to generating wealth and improving your financial situation. Investing your money is one of the best ways to spend it, so long it is spent wisely, and the investments are sound. But, how much do you put away to invest and when should you do it? Is it better to save your money over longer periods to buy a house, or enter the stock market to make quick cash to spend on other things? Whatever you choose to do, it is important to save your money correctly and invest it correctly. Newcastle Permanent is a bank worth looking at using if you are in Australia. Find them here.
2.1. Invest in House
Buying a house can be considered one of the biggest investments on the table. It is a financial commitment of 30 years, so there is plenty at risk. It is important to have a supportive bank that is offering the right rates and Now, investing is the big-ticket item when it comes to generating wealth and improving your financial situation. Investing your money is one of the best ways to spend it, so long it is spent wisely, and the investments are sound. But, how much do you put away to invest and when should you do it? Is it better to save your money over longer periods to buy a house, or enter the stock market to make quick cash to spend on other things? Whatever you choose to do, it is important to save your money correctly and invest it correctly.
2.2. Invest in Stock Markets
Investing in the capital market also means the risk is the obstacle to entry. Making money takes time, doesn’t it?
No more. With very little upfront money the internet has made it easy for consumers to get started. That means you can put in a few dollars before making a bigger commitment to familiarizing yourself with investing. Best share isa a great way to learn how to invest while risking very little money.
2.3. Invest in Treasury securities
Very many small investors continue their investing journey with securities from the US Treasury but you can. You’re never going to get rich in these stocks, so it’s an incredibly secure way to store your money — and collect some dividends at least — until you’re ready for higher-risk / higher reward investing.
Whatever your decision may be, it is important to have one eye on the future. Enjoy your current moments in life but ensure whatever you do to save money – it is in line with a method. Ensure your finance options (credit cards and home loans) are taken up with the right finance providers, like Newcastle Permanent.