Do you find it hard to save money after getting your monthly salary? Are you the type who lives paycheck to paycheck? Here are tried and tested ways to budget and save money better this year.
Sound financial management and wealth management play an essential role in achieving financial freedom and security from financial emergencies.
Having more than enough can bring you lots of benefits. It does not only cover the necessities but also fuels your dreams. If you save money more than you need, you have more options – and yes, opportunities.
Maybe you want to use the money for traveling? Or you want to continue studying, buy your dream house, car, etc.
1. Plan Your Finances
Financial planning is like having a plan that gives the builder an overview of how the house will look when construction is done. Planning emphasizes how and when to achieve your goals.
Set your short-term and long-term goals.
Start with identifying your goals to be guided as to what portion of your paycheck goes to short-term and long-term goals.
Sometimes fulfilling your short-term goals increase your stamina to go further to achieve the long-term goals. It is effective when you pursue a more achievable goal, and you know that you can achieve that goal.
Planning to get married? Going on a vacation trip? Sending your children to school? Buying or refurbishing a house? Or investing for your retirement?
Depending on how and when these plans you would want them to happen, always choose the right tools. Set the amount and how much time you need to achieve your goal.
Useful tip: Pick the right products for retirement. With the help of a financial advisor, review carefully the premiums, interest rates, and risks involved.
Account for your expenses and sum up all your fixed expenses that come regularly. By doing so, you will be guided on how much you spend and how much goes to savings and other investments like stocks and mutual funds in financial institutions.
Define what are necessary purchases from those you can live without.
There might be items you bought on sale or discount, thinking that you might use them in the future. However, it turns out that they were just kept untouched for the longest time.
Think and decide thoroughly before you purchase to avoid stumbling into the pitfalls of being a compulsive buyer. As much as possible, trim down unnecessary expenses, and pay attention to those no longer in use like subscriptions, memberships, etc.
2. Set Aside Money for Emergency Expenses
One of the top unexpected expenses that considerably require your immediate cash outlay is hospitalization and other medical needs. Look for better health insurance that gives a better return.
Check out the offers of the health insurance providers who are known to deliver good results. Further, protect your house, car, and other properties by considering property insurance options. Similarly, life insurance is also one thing that should be on the list.
3. Use your Credit Sparingly
Avoid splurging so much on credit. It may hamper your capacity to pay. Be sure you have enough funds to pay your bills on time to avoid insurmountable fines, interests, and penalty fees.
Be frugal, spend within your capacity, and do not rely on credit cards.
4. Be Prudent on Housing Loans, Rent, and Payment
This part of your finances requires sound and thorough decisions since you need to invest a huge amount of funds.
In search of a perfect home, keep in mind what is ideal for your budget. There might be features in your dream house that you want to have, but you cannot afford to pay for.
Or you might get the best dream house ever but end up broke. Be realistic, and don’t forget that a house is just part of having a comfortable place to live in.
5. Nurture the Habit of Saving.
Remember the ant story in the Bible? “Ants are creatures of little strength, yet they store up their food in the summer.” Proverbs 20:25. The ants save abundantly for the rainy season.
Learning the value of saving money is very important, and it is best to start it while young. Once saving becomes a habit, it becomes a lifestyle.