Financial experts argue that it is not the size of the budget that matters but the process of structuring expenses. This is a guarantee that you will not live, waiting for the next income stream, and will even be able to save money for a large purchase with a small salary. Below is a step-by-step guide on how to save and accumulate money correctly, and you can also use this YTD calculator to help with your financial planning.
1. Set a Goal
Goal setting is the main motivating factor in saving money. It can have both a specific expression and an abstract one. For instance, savings to accumulate money for the upcoming holiday, purchase of large-sized equipment, or simply stop living in debt and eliminate the complete lack of money before the salary.
2. Change Your Way of Thinking
Often, the problem associated with the question of how to accustom oneself to save is an established way of thinking. You have to get rid of the two most common stereotypes:
- immediately spend everything that you received.
- buy branded things for the sake of prestige.
Getting income is not worth spending every last penny in the first days, buying everything. First, you need to analyze the costs for the coming month and rationally distribute the money. Also, you should not buy, for instance, the latest iPhone model just for the sake of sham importance.
3. Choose a Strategy
There are several approaches to optimizing your personal or family budget. It is not necessary to adhere strictly to one direction. Let’s highlight the most common strategies on how to save money and start accumulating:
- The total income is determined, and funds are sparingly spent on the essentials within a month. The balance at the end of the period is deferred.
- At the beginning of the month, expenses are planned for the month. And the difference between income and expense is immediately eliminated.
- When money is received, 10-15% is allocated one time, and the rest is spent as needed.
For people who are just thinking about how to start saving, it is more expedient to choose options 2 and 3 and use Forextime tips. This allows you to determine the amount of savings for the month initially and thereby discipline yourself.
4. Moving on to Direct Savings within a Month
A provident spending attitude applies to any day-to-day need. In saving the budget, a table will help, where income and expenses for a certain period will be reflected. You can use it both in the electronic form of the Excel program or a profit calculator and in writing in notebooks. This makes it possible to analyze the data throughout the month. At the end of the period, you can chart your expenses, which will help you change or support the tactics of saving in the future.
How to save on mandatory payments
Monthly payments are mandatory costs that are repeated every period. These include:
- renting a flat,
- paying for utilities,
- gym membership,
- coteries for children, etc.
To optimize the cost of utility bills, you can resort to the following techniques:
- installation of water and gas meters;
- careful attitude to water and energy resources: timely turning off of water tap, switching off of light and household appliances after use.
If renting a flat takes up a large part of your salary, then you should consider looking for a cheaper housing option or purchasing real estate on a mortgage with fixed payments. You can look for free sections for children in government clubs and cultural centers.
5. Analyzing the Savings at the End of the Month
A popular direction of saving methods in India is minimalism in things and the interior. This approach allows you to get rid of unnecessary items and reduce your monthly expenses. Summing up the results at the end of the period, it is necessary to analyze the spent costs during the month and think about what the next time you can refuse.
The main principles of saving in the family
Saving in the family involves meeting the needs of all family members. But, at the same time, you can deduce five crucial principles that will help save the budget:
- Do not borrow money. This will make it possible to learn how to count on having finances and avoid overpayment of interest to banking structures.
- To register and use store bonus cards. When accumulating bonuses, it is possible to pay them for a part of the goods.
- Choose the optimal tariff for smartphones. An excellent option would be a single payment to provide unlimited communication and the Internet.
- Maintain a healthy family life. This approach will eliminate the cost of cigarettes, alcohol and reduce the cost of medicines.
- Constantly audit the household. Sell unused things on the Internet.
If possible, you can earn extra money in addition to your main job. For instance: selling the results of your creativity, writing articles for sale, forex trading, blogging, providing repair services, etc.
How to use the accumulated funds wisely
Now the month is over, you put aside a thousand dollars, and then the question is what to do with them. There are several options here:
- Set aside a separate “Savings” envelope. The method is quite dangerous, as it will be tempting to spend them.
- Open a deposit with the possibility of replenishment. In this case, a small percentage will be charged from the bank for the use of your funds.
- Invest in real estate that can be rented out. This is possible with sufficiently large savings.
- The allocated money mustn’t just lie in the envelope, but work for its owner and bring income. Therefore, even with the minimum free amount, open a deposit, especially since you can do this without leaving your home online.
Final Words
So, the process of saving should start by changing your spending principles. Structuring costs will allow you to adhere to the chosen strategy throughout the month. And the tracking of the budget will reveal how best to save up to 20-40% of income while maintaining the quality of life.