Saving money: How to begin?
Saving money is one of those things we’re told we should do basically since we first hear about money. However, most of us don’t really practice it most of our lives for a variety of reasons, having relatively low wages and high expenses being the most common of them.
Yet there’s no denying having some money saved is incredibly important for our well-being. Besides letting us deal with emergencies as they happen, just knowing we’ll be fine already helps our mental health, giving us some peace of mind.
But the problem is, most of the time we don’t know how to begin. Because just spending less isn’t really helpful – and can often seem impossible.
Budgets are your friends
Making a monthly (or weekly, or bi-weekly, depending on your payment schedule) budget can feel like a chore and, depending on our previous experience with it, pointless. Keeping track not only of what we spend, but of what we’re going to spend, after all, can sound a little too close to predicting the future, and thus impossible.
However, knowing ahead of time how much money you’ll need and what for is the very first step towards learning to better manage your finances. A budget will let you know exactly how much of your monthly income is spent on bills, food, and rent, and how much of it is being spent on other things.
Keep track of miscellaneous expenses
Back to those other things mentioned above, they are often the more problematic parts of our expenses. While those other things can include important expenses we may forget about, like renewing your car insurance, more often than not those expenses consist mostly of tiny, impulse purchases that quickly add up.
The idea isn’t to kill those expenses – even superfluous expenses, after all, can be important for our well-being. The idea, instead, is to know just how much of a weight those expenses are in our finances. Having an ice cream, dining pizza, or going to the cinema once in a while isn’t bad – but you might be surprised how much all those things can amount to once you add them up. And once you’re aware how much tiny habits might be costing you, you can go back to the step above and properly budget those other things.
Get rid of budget vampires
A budget vampire is that service, subscription, or regular payment you keep making but don’t fully utilize. It’s that expense that you could easily get rid of, or minimize, and save money with. More often than not, these vampires look so small we feel as if they won’t make a dent on our finances – but as mentioned before, things add up.
So take a look at them. Your phone plan, for example – are you really using it to its fullest? Perhaps you could do with a lower bandwidth plan and save some money. The same logic should be applied to your cable TV subscription, would you lose much if you chose a cheaper plan? What about that HBO, Netflix, or Hulu membership, are you a regular watcher? Or could you do without it?
Other services, like our internet, can also be put under the microscope. In most cases, we pay for plans that are much faster than we really need – because no, you don’t need gigabit internet to browse Facebook and find out what Aunt Tillie has been up to. A slower plan (or a lower monthly data cap, if you’re unlucky enough to have a cap) might be just as good for us, at a lower price.
Keep impulse buys to a minimum… and get rid of those vices!
Most people these days have too many things to pay and too little money to pay it all with. However, most people also aren’t on such tight budgets that they only get what is absolutely necessary, and nothing else.
While keeping track of these miscellaneous expenses will help, try being conscious of said expenses from the get-go. Be it food, clothing, movies, or other items, do ask yourself if you really need it before spending money. The goal isn’t to eliminate all impulse buys, although if you somehow manage to, kudos to you. Just being conscious of things and wondering if we really need them can make a huge difference.
And while you’re at it, remember how you took up smoking back in high school and never dropped it? Addictions are a huge weight on our budget, because they’re recurring expenses we can think of as “necessary,” but that we really don’t need at all.
So cutting off on those cigarettes or beers at the pub can alone save you a lot of money.
Put money aside, if you can
Putting money aside can seem difficult, but only because we often focus too much on the goal (having a million dollars saved, for example) and too little on the process of getting there. It’s a case of missing the trees for the forest.
If instead of thinking on how difficult it is to save a large amount of money you start setting aside some money, no matter how little, you’ll soon enough find out you’ve got an emergency fund set up.
For example, putting aside $20 a week is a goal most people could attain by just cutting on impulse expenses. Is it a tiny amount? Yes, it is. But it adds up, so after a year doing this you’ll have $1,000 saved, which is a great start for a savings fund.