A large percentage of my friends and clients have asked the secret of saving money successfully. Actually, there is no secret in saving money, but there is something you have to have to achieve it. It is called discipline. With discipline, you’ll be able to stick with your financial goals and plans.
And of course, with discipline comes rules that you should follow to make saving money a whole lot easier.
Today, I’m going to share with you six of rules I follow to save money.
Make sure to take notes!
Rule #1 – Pay yourself first.
The best way to save money in the first place is to make sure that you won’t even have the chance to spend it in the first place. So what do you have to do? The moment you received your paycheck, immediately set aside a portion of it and deposit it in your savings. Make this a habit. It should always be income minus savings equals expenses, not income minus expenses equals savings.
Rule #2 – Avoid accumulating new debt.
It is always better to pay a sum of money up-front since its cheaper in the long run, compared than paying off an equivalent loan while interest accumulates over time. One tip I can give you is to use your credit card in installment payments or periods with no interest. For example, if you’re planning to buy a new smartphone using your credit card then choose a shorter payment term without interest rate than a longer payment term with interest. Remember that any debt that accumulates interest over time is bad debt.
Rule #3 – Set reasonable savings goals.
If you want something to turn out successful, then make sure that you have a goal. The same thing applies to your finances. Set a savings goal for yourself and create an action plan to make sure that you’ll be able to achieve it. For example, if your goal is to save Php 120,000 in a year, then set aside Php 10,000 per month. That way, you’ll be able to end up with Php 120,000 after a year of saving.
Rule #4 – Establish a time-frame for your goals.
Give yourself an ambitious but reasonable time limits when achieving your financial goals. Aside from that, it is an excellent motivation tool, it makes sure that we continue to work on our plans. The reason why most people procrastinate when it comes to building a savings fund is that they think that they always have the time to do it as long as they have a job and earning money. This gives them a sense of complacency until it’s too late for them to realize that they have no savings at all, and the inevitable happens.
Rule #5 – Keep a budget.
To become successful in handling your finances, it’s important to plan a budget and keep within it. Assigning a portion of your income to all of your major expenses ahead of time can help you ensure that you don’t waste your money. You can start by dividing each paycheck according to your budget as soon as you get it.
Rule #6 – Record your expenses.
If you want to start being financially aware of how you spend your money on a daily or monthly basis, the best thing to do is to record your expenses. Keep a running tally of how much you’ve spent on various types of expenses each month. This can help you identify unnecessary expenses so you can adjust your spending habits that can adequately fit your income. This is also one great way to avoid spending beyond your needs.
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Have a frugal but fun day!