How to Save Money Effectively
Many people want to save money, but some find the practice difficult to accomplish. There are several reasons why people cannot save, and often, they do not have an idea of the effective ways to save. Most people think they should save the money left after buying the things they believe they need. However, for world-renowned investor Warren Buffett, the most effective way to save is to spend only what is left after putting aside the amount you must save.
With the economic uncertainties people experience today, the more it becomes important to start saving. Many challenges in life are impossible to predict, but it is good to prepare for any problem since your savings can help you tackle the many hurdles you may face.
Reasons to save
When you have savings, you have a sense of protection and power that help you navigate hindrances and emergencies. Your reasons to save may include the following:
- Have additional fund to cover unexpected or emergency expenses
- Pay for your children’s education or marriage, or both
- Make a down payment for big purchases, such as major appliances or a house
- Make investments to create passive income
- Have a retirement fund to help with your daily expenses after retirement.
How to save
Make it a habit to save and learn the methods to help you save money.
1. Do not keep a big debt. Your savings diminish when you are in debt. While getting a lump sum fund through a credit card or a loan is helpful, you should remember that loans like that have high interest rates. Therefore, you should limit your debt so you can continue saving money.
2. Purchase genuine products. Original products are of high-quality, so they last longer. Therefore, even if the price is higher, you can save on maintenance and repair. Likewise, you do not need to buy the same item after some time. Moreover, many genuine products carry a warranty.
3. Limit your dining out and entertainment expenses. Of course, socializing is important, but it is more important not to lose track of your spending.
4. Ask for cash back, coupon codes, and discounts. You can reduce your expenses when you avail of product promotions. Plus, several brands offer discounts and rewards regularly. You can time your purchases when your favorite brands offer discounts and other promo options.
How to start saving
- Determine your current sources of income and the total amount you get each month.
- Separate the funds you need to run your household and meet all your other expenses.
- Set aside a budget for socializing.
- Mark the money left after you have set aside funds for necessary expenses as monthly savings.
- Stick to your budget and spend wisely. Operate within your budget all the time, except when there is an emergency.
Opening a separate savings bank account will help you maintain the discipline to save. Most banks have several account options and features. For example, you can automatically transfer your monthly savings from your business or regular salary account. Instead, use the money in your savings account directly in appropriate investment instruments.
Photo Attribution:
1st & featured image by https://www.pexels.com/photo/crop-unrecognizable-financier-using-calculator-on-smartphone-near-dollar-banknotes-4386324/
2nd image by https://unsplash.com/photos/hQSDJhTf2Po
