How to save money is one issue that many people are familiar with, but only a few manage to accomplish it.
The simple explanation that inhibits people from saving money is the unlimited nature of human wants which requires to be met with the limited resources or money .
However, if you have the right mindset and the drive to attain financial stability, you will appreciate the value of sacrificing and saving money. If you have savings, you can use it to make to investments and build your wealth.
The question ,how to save money has been answered by many financial analysts, this article gives an outline of top strategies to save money.
List down your monthly expenses
When you outline all your monthly expenses at the beginning of the month, it helps you prioritize your expenditure and know how much money you need to spend . Set aside enough money to cater for rent, meals, commuting, bills like electricity and entertainment. At the end of the month, conduct an analysis to determine whether your spending was the budgeted amount, more than or below the budget amount. Explain the reason for the discrepancy and outline how to avoid it in the next month. Remember to try to cut down your monthly expenditure whenever possible. If you find wastage in your household try to minimize such cases to keep your expenditure at minimum level.
If you have targets that you hope to accomplish, you will understand the difference between what you need and what you want.This will help you to spend money on the most urgent matters and set aside the rest in savings. Having a target makes you conscious while spending every coin since you will be working towards attaining that goal. While setting targets, be careful to ensure that your targets are realistic and attainable.Think of your monthly income, consider your expenses and set a realistic saving target that will not compromise your standard of living. Setting SMART targets or specific, measurable, achievable, realistic, and time bound targets will help you accomplish your saving plan.
Deposit money in savings account
Having determined how much you need to live comfortably, make arrangement with your bank to deposit the rest in a specified saving account.This is to limit the temptation of withdrawing the money from your account in case of emergencies.This technique known as “pay your self first” has been proved to be the most effective saving technique.
Remember as you save, don’t engage in borrowing as this will be counter-productive to your effort to save. By definition,saving is what is left after consumption, thus ensure you meet all your basic needs before committing your money to a saving plan to avoid borrowing. If a debt is inevitable, ensure you make a huge down payment to reduce interest payments on the loan.
Pick a saving plan that allows your money to grow
If you want to achieve your targets faster, you should pick a plan that makes your money grow. How much interest on saving do you earn each month?, is that the best rate in the industry?. Consider saving with financial institutions that give the best rates as this will allow your money to grow faster.
These tips don’t outline all the strategies you can employ to save money. As a general guide, how to save money entails, avoiding spending more than you earn, setting a fixed percentage of monthly income as savings and always minimizing expenses.