You have to get started into saving your money no matter how hard it is. There are ways in which you need to figure out to save your money and start planning to achieve your financial goals. There has always been a need to save money to see our dreams into reality. Every individual has got one single dream which has got its connection in financial terms, be it owning a posh dream house, providing a decent education to the kids, retiring with handsome money. For all these things, one not only needs to save money but also needs to develop a blueprint so that he can see his dreams turning into reality. Here is the step-by-step guide to saving your money and provides a realistic plan to follow in a broader aspect.
1. Start recording your expenses
It is the initial step of figuring out how much you spend. Go for keeping track of all your expenses that means every coffee, newspaper, and snack or anything that you buy. Ideally, you can account for every penny. Once you have your data, organize the numbers by categories, such as gas, groceries, and mortgage, and total each amount. Consider using your credit card or bank statements to help you with this. If you bank online, you may be able to filter your statements to easily break down your spending. Make a detailed analysis on a Sunday morning, or whenever suitable and start recognizing the loopholes, wherein a larger amount or unnecessary expenditure has been made. With such observations, you can realize which expenditure to stop and thereafter you can correct on your own.
2. Make a financial blueprint
Once you get a clear picture of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income, so you can plan your spending and limit overspending. Along with your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance. Find more information about creating a budget.
3. Prepare yourself to save money
Now that a financial budget has been made, create a space for savings category within it. Try to put away 10–15 percent of your income as savings. If your expenses are so high that you can’t save that much, it might be time to cut back. To do so, identify non-essentials that you can spend less on, such as entertainment and be dining out. Try to put together ideas for saving money every day as well as cutting back on your fixed monthly expenses. Considering savings a regular expense, similar to groceries, is a great way to reinforce good savings habits.
4. Choose something to save for
One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for anything from a down payment for a house to a vacation then figure out how long it might take you to save for it. If you need help figuring out a time frame, try using savings goal calculator.
5. Set your priorities straight
After your expenses and income, your goals are likely to have the biggest impact on how you save money. Be sure to remember long-term goals, it is important that planning for retirement doesn’t take a back seat to shorter-term needs. Prioritizing goals can give you a clear idea of where to start saving. For example, if you know you are going to need to replace your car in the near future, you could start putting money away for one.
6. Make saving an automatic process
Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money to, or even split your direct deposit between your checking and savings accounts. Automated transfers are a great way to save money since you don’t have to think about it and it generally reduces the temptation to spend the money instead.
7. Watch your savings grow
Check your progress every month. Not only will this help you stick to your personal savings plan but it also helps you identify and fix problems quickly. These simple ways to save money may even inspire you to save more and hit your goals faster.