Why should you learn how to save money? Remember in my previous article where I said that it is important for you to learn how to manage your money so that you can plan them for the benefit of your future. Learning how to save money can help you greatly towards achieving your financial goals.
Steps to Start Saving Money
- Have a budget worked out for every month
You should pay a lot of attention to this step as this would allow you to visualize roughly what you are going to spend on and how much you are going to spend for the month. Firstly, you have to decide how much you want to save and that amount shall not be touched at all.
Afterward, you can start looking out for expenses by marking events/meetups on your calendar where you are going to spend extra money. You should also factor in your average spending every month for expenses such as food, bills, and transportation.
- Put your savings away
You should put your savings aside and refrain yourself from touching no matter what. You have to ensure that you stay disciplined, if not your budgeting is just a waste of time because you are not going to meet your goals.
- Think before you spend
Ensure that you always rationalize your buying and ensure that you consider about the needs of buying that item. You should not buy just because something is cheap and don’t be baited by temptations.
- Record down your spendings
You should record down the different things that you spent money on. This will help you to analyse your performance at the end of the month as you can see what went wrong and what caused you to fail your budget. This will help you to adjust yourself and your budget to make it work.
- Actually do it
After working all these out, you should take actions and changes things up. Nothing will change unless you start doing something about it. If you are just going to only think and talk about saving money, you wouldn’t know the power of planning and analysing your spendings.
Identify Needs Vs Wants
A lot of people fail to how to differentiate the things they need and the things that they want. They end up spending up most of their money on things that they hardly use, wondering why their house if full of useless things that are just taking up their space.
One example would be buying clothes, I am sure that most of you love buying new clothes as people of our age is at the stage where we want to dress up and look good. But have you spent wisely on clothing? Well, some of the people nowadays are following the trends of buying branded clothes such as a Fila T-shirt that easily costs nearly $100. Think about it, if you only have $200 in your bank, is it really a need to buy that shirt? I am not saying that you are not supposed to buy yourself nice clothes but it really depends on your financial situation. Imagine how many T-shirts you can buy if you choose those at H&M which probably only costs about $30 for a graphic T-shirt and $15 for plain T-shirts.
Planning Your Money
In the earlier days, I used to work as a banquet server and I was earning a decent amount as a student. But I did not control my spendings at all, I spend what I got and I regret doing so. It is only until I started reading about finance where I regret putting all my hard-earned money to waste. As the saying goes “if you fail to plan, you plan to fail”, you should start planning your money so that you can follow a certain guide that is created by you.
I am currently planning my money by calculating the amount of money that I need for daily expenses. Let’s say if my daily expenses are $10 on average, I would multiply it by 5 since I usually eat at home during weekends so I only need $50 a week. I would just redraw $50 from my bank and keep it in my wallet. What’s in my wallet will be my allowance for the week.
Now you all might say that what if you have outings with friends or birthday celebrations. I would set aside another $150 for meetups or meals with my friends. If any is remaining, it will go to my savings.
If let’s say you earn $1000 a month, 4 weeks of allowance is $200 (4×50), others expenses such as outing amount to $150-$200. You would still left around $600 at least for you to save. You just have to save up until you have enough for your emergency funds. By the time you have your emergency funds, all you need to do is to save up a little before you start putting in money for investments.
Track Your Spendings
By tracking your spendings, you would be able to tell what kind of things are you spending your money on. For example, if you observe that you have been spending too much money on a game then you should probably start being more conservative and spend less on the game. This would allow you to feel guilty about your spending which would then help to control your spendings as you go along.
There are many apps that helps you to track your spending such as;
- Money Budgeting app by Aimbity AS
- Money Manager app by Draw Puzzle Game
- Money Manager app by Realbyet Red
You can read more about the apps here
Conclusion
I feel that it takes initiative and discipline to start saving money. Everyone should start saving money so that you can start making use of the money that you saved to grow them into more money! It is also completely fine for you to reward yourself once in a while and buy something that you like.
