Finding a family that isn’t going through financial difficulties these days is borderline impossible. Whether it’s unemployment, high expenses, or lack of planning, a lot of people end up having to do some major cleanup of their finances. By doing that, they make it easier to see how their dreams can be fulfilled with minimal effort and planned savings.
In theory, saving money is a very simple thing. All you’ve got to do is just spend less than you earn. However, the process requires dedication and caution to put all that extra cash together.
It’s not easy, but it’s certainly possible! On top of this, financial planning doesn’t have to be the same thing as suffering. Check out some tips on how to save money without too much effort.
1- Write it all down
Make sure to first do a deep analysis of your expenses and receipts. Writing all your expenses into a spreadsheet may be the easiest way to figure out where you can make budget cuts. It is also necessary to list all of your expenditures, after which you’ll compare them with your receipts. If you have difficulty dealing with spreadsheets, you can use any other tool at your disposal to make this process easier for you.
Don’t forget a single expense! This is the time to break down exactly where you’re losing money. Did you tip the waiter a bit too much? Did you have an extra cup of coffee yesterday? Did you make a poor investment? All of it is equally important and you should write it all down!
This analysis should also include a provision for expenses. That is, you can try to predict the expenses of the ongoing month and the three coming months. For couples and families, it is best to add up the expenses every member makes.
2- Split your budget
Once you’ve written it all down, divide your budget into three large groups and apply the famed 50/30/20 rule to your budget. In this way, you will be able to set spending limits for each of the categories and it will make noticing holes in your budget much easier.
- 50% of your budget should go towards fixed expenses – this applies to the expenses you have every month (e.g. rent)
- 30% for variable expenses – these are expenses that change along with your consumption, and there’s often room for improvement here (for example food, clothing, leisure)
- 20% straight to savings – money that you’re not planning on spending or are investing later. As long as you manage not to spend it on superfluous expenses, you’re going to be ahead! Once you’ve saved a decent amount, you should evaluate the best investment for your profile and goals.
3 – Unify your debts
If you’ve got any debt, make a survey of what you owe, including the interest rates and fines. After this, make sure to check if there are any credit options that fit your circumstances. Currently, banks and financial institutions offer several options that may be able to help, those being: personal loans and payroll, among others.
Compare the interest rate, and the total effective cost (CET), and if they work for you, you can pay all your debts with a single loan, which is likely going to fit your budget.
4 – Avoid unnecessary expenses
Avoiding pointless spending is a difficult task for anyone. Many people end up paying interest and bill fines simply because they forgot to pay on the correct date. With the rush of everyday life, this has become a fairly common thing, and someone’s profiting from it. No matter how small of a fine it may be, you should do your best to avoid getting yourself into situations where you’re forced to pay them.
Avoiding unnecessary expenses will certainly require some creativity on your end. That little dinner at the weekend restaurant can easily be swapped for a good homemade meal. This simple change is bound to make a massive impact at the end of the month when the bills come rushing in. Now imagine what a year of rational spending could do.
You could even consider switching lunch on the go for a lunch box you made yourself. It may require a little more organization, but in addition to saving you money, it also helps you enjoy a healthier meal every so often.
5 – Force the economy
If you don’t have the discipline necessary to save money on a very tight budget, look for an investment alternative, and stay committed to making contributions to it. The way to do this is to adopt an investment plan that makes automatic payments to something like a private pension. Essentially, there’s no excuse and when you realize it, the money is practically waiting for you to pick it up.
If you still don’t have enough room in your budget for investments like this, you could also adopt the “day of zero expenses” habit. Choose a single day of the week and make sure not to spend a single dollar on that date. Use only the resources that you’ve got on hand. You will see that at the end of the month, this little day can earn you extra money.