5 Steps To Save Money
The hardest thing to do after earning a living is to save the money earned. So saving the hard earned money is the second most difficult thing to do. A lot of people do not have a budget for their expenses and it will spiral out of order and will cause a person to either save less or worse become debt addict- hooked on home, bank, personal, car and other loans and at the same time with a credit card that is fully maxed out.
Step 1- List out all the expenses for the next 30 days from today. Buy a small and cheap notebook and note down everything you spend on, household bills, groceries (keep the receipts), magazine or newspaper subscriptions, loan repayments, transport costs-fuel or public transport costs, costs of lunch for 30 days when you eat out as you are working etc. Note down every nitty gritty thing, even that cup of Starbucks coffee with whipped cream. If you have a family, ask them to do the same for 30 days just to humour you and check that they do it, every day for 30 days. At the end of 30 days, they will hate you. But 10 or 20 years later, you will be comfortably prepared for retirement.
- (a)If your total household salary (you and your spouse plus whoever else is contributing) minus your budget is negative, please redo Steps 2 and 3. You need to move items from necessities to the 'I love myself' category.
- (b) If your total household salary minus budget is positive good for you. But if the savings amount falls below 25% of your salary (ie if your household salary is $5000 and you tell me you can only save $200 after expenses, please redo Steps 2 and 3, and love yourself more and put more from necessities to that-minimum for $5000 is $1250 saved).
- (c) If you have fall into the category of just housing loan without credit card debt and whatever else loans, to make the process less painful, you are allowed to save only 20% of your salary but no less. Else please redo Steps 2 and 3.
Step 5- Open a savings account (joint account if you and your spouse both earn and contribute to the household) where you put the money that you have budgeted as savings into it the first thing you do when you receive your salary cheque or amount in the bank. So if you earn $5000 and budget $3500 as expenditure with $1500 savings. PUT THE $1500 into the savings account FIRST before spending a single cent AND you and your spouse will swear never to touch the money except for investments and when you retire or when either one of you go unemployed. BOTH of you must agree that you need the money before you can withdraw it to spend.
For the people who have not saved any money congratulations, you have just saved 20-25% of your monthly salary as a start. For people with debts to service, put 75% of your money saved to service the debt that has the highest interest (normally the credit card debt). The rest of the 25% you are to save at least one month's salary in your bank account first before investing the surplus amounts. Even if you have debts to service, you need emergency funds for times of need.
Post a Comment