Saving money is a concept that most people would like to think that they are well versed in, but in reality, the majority of us are not. We talk a big game when it comes to saving money and never seem to make true progress. So what can a person do if they wish to save extra money?
Let’s take a look at the top 5 ways you can change your financial fortunes.
1. Budget Every Month
For those who are gainfully employed and can reasonably expect to earn the same amount of money with each incoming paycheck, budgeting should come easy especially with the help of some inexpensive personal finance software. Sit down each month and list all of your unavoidable expenses (car, house, day care, etc.), while keeping a specific financial ceiling in mind. If you know how much you earn and how high your monthly overhead is, then there should never be any mystery as to where your money goes.
2. Eliminate Needless Expenses
Making a budget is great, but if you continue to include needless expenses in your calculations, you will not be able to make any sort of meaningful progress. Take a hard look at your spending, so that you can see where need to be made. Perhaps you go to Starbucks every day or maybe you eat out too frequently. Maybe you’re someone who enjoys bars and nightclubs. If you can’t seem to get ahead financially, you may need to lose a few luxuries.
3. Mind Your Own Business
One of the fastest ways to fall behind financially is to keep too close of an eye on what your friends and neighbors are doing. When we see people in our lives buying new things, we feel a certain pressure to keep up. What we do not know is the other person’s financial situation. They could be placing themselves into debt or they could be able to afford their purchases comfortably. Worry about your own business first.
4. The Little Things Add Up
Many of us fall into the habit of spending our entire paycheck, then waiting for the next one. But instead of living hand to mouth, a person can easily set themselves up with a rainy day fund. By setting aside a mere $20 out of each paycheck, a person who is paid on a weekly basis can save $1,000 each year.
5. Avoid Credit Cards
Credit cards are great to have in case of an emergency and we should all make regular, smaller purchases to build a good credit score. However, a credit card should not be used on a daily basis for incidental expenses or to help us buy things that we do not actually need. If something is a need, as opposed to a want, only make the purchase if you have the cash on hand and are able to spare it.