Have you been wanting to start saving for a long time, but you’re having trouble? The experts from Telecomasia.net have gathered the best ways to start saving for sure.
- Pay off all debts
- Start keeping accounts
- Set goals
- Start small
- Forget about impulse spending
- Set aside money
- Don’t withdraw money
- Make money
- Tell friends and family
- Don’t be ashamed
This is not so much advice about how best to save money, as a warning against the most common mistake. Most often, people with mortgages or large consumer loans fall into the debt trap.
The idea of making minimum payments and saving or making deposits with the remaining money from spending seems very attractive, but remember that loan rates in 90% of cases will be higher than the interest on any investment instruments. Therefore, early repayment of debts should be the main goal.
The optimal sequence of savings is as follows:
- Money for early repayment of debts;
- Rainy day fund (money that may be required in case of emergency unforeseen circumstances);
- Savings for growth.
First, understand how much money you get from various sources and where you spend it. To do this, it is not at all necessary to carry out calculations on paper or use inconvenient tables in Excel. You can download one of the many applications for recording income and expenses on your mobile. They will help you analyze all your spending for a certain period.
There is a huge difference between saving money for vacations, renovations, expensive purchases, and simply saving money to create a rainy day fund. Of course, you can save on the “just in case” principle. But in practice, this approach often turns out to be unjustified. This is because uncertainty does not satisfy our brain.
So what to do?
- Set at least one goal for saving;
- Decide how much you want to save;
- Choose how long you want to save;
- Calculate how much you need to save and compare the amount with your capacity.
Steps 2 and 3 can be combined. It will be necessary to adjust either the amount or the timing.
There’s a rule: Before you can run a marathon, you have to learn how to run a hundred-meter race. To figure out how to save for big goals, start with an amount you can put away in 2 or 3 months. Good options for training:
- buying the right gadget;
- the purchase of furniture (preferably, it should be related to rest, like a bed or a chair);
- buying jewelry.
The main point is that the thing that you acquire really brings joy. In this way, the brain connects accumulation with powerful positive emotions.
According to statistics, most often status purchases (expensive phones, watches that emphasize our status) are made by people who are short of money. This is a reason to think!
Therefore, your best friend should be the shopping list, the one-day rule (this is how much you need to think before purchasing) for anything other than food, the 30-day rule for any large purchases (furniture, appliances, and so on).
This is a slight improvement on the previous method. Often we make impulse purchases to make ourselves happy when we are sad because of failures at home or work. But the money that goes into your savings account can also be a reason to improve your mood.
So if you haven’t purchased another pair of jeans or a pack of cookies, set aside the money you wanted to spend on those unnecessary purchases.
Open a deposit in the bank without the possibility of withdrawing funds to avoid unnecessary temptation to spend everything. Remember also that the larger the investment, the less tempting you are to close it for spontaneous spending (which sometimes seems necessary).
Investing can often bring more profit than savings. But this will only happen if you thoroughly study all aspects of investment and work with licensed brokers or banks.
Some of the most profitable types of investment are in stocks, bonds and indices, but remember you can lose everything you put in, so you need to know what you’re doing.
In most cases, family and friends will try to support you when you want to achieve a goal or start something new. Perhaps if you tell your loved ones that you are trying to save money, they will help you as much as they can. They can give you money for holidays instead of impractical gifts, invite you to visit instead of going out to restaurants or share their money-saving secrets with you.
Sometimes people think it’s a shame to try to save money for something. They think that by making sensible purchases or limiting unnecessary spending, they act like beggars. However, this is not true at all and this mindset is one of the main obstacles to achieving your goal. People trying to prove to themselves and others that they have a lot of money often spend unnecessarily and put themselves into debt and credit.