Ever wondered what would you do if you had that extra money in your budget every month? It could simply make up for your ideal vacation, or you could keep it for future emergencies. If you had that extra money in your monthly budget, then you would just pay off your debts.
Irrespective of your stage in the financial journey, you can take those steps in the right direction and turn around your financial status by saving money.
All it takes to make things work in your favor, is that right step for the financial freedom. Though, we wouldn’t deny the fact that the first step (for anything in life) is the toughest step to start with.
This is the sole reason why I created this list of effective methods to save money in your monthly budget, some of which might take some time. Although none of these methods are life-changing things as such, but they can be extremely powerful if you implement them. So, let’s dive right in!
1. Plan The Budget
Saving doesn’t necessary mean not to spend. But it surely means to plan and prioritize your financial goals and thus, your budget. This is the first and the foremost step towards savings. Figure out how you spend and keep a track of all your expenses.
Organize that data in terms of gas, groceries, movies, rent and overall expenditure. Cross-check with your bank statements in order to cover all the monthly expenses.
2. The 50/30/20 Plan
In order to manage your monthly income and expenses, I recommend implementing the 50/30/20 money management plan. Thus, spend 50% of your income on basic necessities, 30% on your needs/wants and keep aside the 20% of your income just for the savings. This way you’ll save 20% of your income every month.
#Insight: Look for a free spending app on the internet, so that you never exceed your expenditure formula. You can even use a budgeting tool to categorize all your transactions and keep a check on your expenses and the 50/30/20 threshold.
3. Plan Your Savings Budget
After planning the expenses and implementing the 50/30/20 plan, you’ll roughly know how much you spend. Use this data to have a workable budget. Workable budget means nothing but a budget where your expenditure measure up to your monthly income and your plan to eliminate over-spending.
For example, car insurance and maintenance, that occurs regularly every year, and not monthly. In such months, you can aim and work around your expenses for extra 10% savings, thereby moderating your 50/30/20 plan a little, in those special months.
4. Set Goals for Savings
Always plan for your short-term and long-term saving goals. Set your goals accordingly and check how much money you’ll need to achieve those goals and how much time will it take to get that savings.
Here’s a rough table of your possible short-term and long-term goals:
|Short – Terms Goals (1-4 years)||Long – Term Goals (4-10 years)|
|Family Vacation/Solo Vacation||Home Loan or House Down-Payment|
|Car Down-Payment||Kid’s Education/College|
|Emergency Funds (Wedding, Medical)||Retirement|
5. Figure Out Ways to Eliminate Your Expenses
If you spend too much on things and necessities, then you’d not be able to save that much. It will eventually take more months to save that much as planned.
Cancel all those subscriptions and premium memberships that you no longer use. Look for those subscriptions that auto-renew every month and try to cut out those expenses in order to save more and more each month.
6. Organize Your Priorities
Your monthly expenditure depends on how you organize your priorities, especially when it comes to deciding your income and budget goals. Planning for your short-terms goals should be one of your priorities, but retirement planning is damn important too.
For example, you should keep aside some money every month for your retirement and healthcare in advance. This way, you can organize your priorities for efficient savings.
7. Go for Automatic Saving
Opt for saving automatically by getting in touch with your bank. Majorly every bank offers automatic online transfers between current and savings accounts. Plan when, where and how much to spend money, so that a portion of deposit directly goes to your savings account.
Saving automatically is actually helpful for long-term, because you wouldn’t be able to over-spend and thus, it will reduce the spending limit as per your bank limits. If you haven’t already set the automatic saving, sign up today by visiting your bank branch.
8. Nurture Your Savings Tree
Make it a habit to review your expenses and budget goals and planning on a regular basis and check your progress in terms of savings every month. Not only implementing all these methods, will help you save a lot of your valuable money, but it will be easier to solve the problems and support your family or friends.
Also, once you identify how much you spend and where you spend your income, it becomes easy to save as planned and fulfill your short-term and long-term goals.
Learning how to save and taking the strong steps towards achieving that goal, is the most effective action you’d take for your financial freedom and long-term goals. Getting started is sometimes difficult in order to start saving.
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