The first time I contemplated saving was after my graduation. I had just started living alone. I needed to take charge of my financial life and secure my future. Thinking about all the benefits, I’d enjoy from saving was the easy part. Setting aside some money monthly, however, proved a bit challenging. More often than not, I would spend everything I earned on expenses and prioritize stuff I could have survived comfortably without.
I figured out that if I didn’t develop a strategy to begin my money-saving journey, financial freedom would be a lot harder to achieve. Before I decided on the steps to incorporate in my plan, I did extensive research. I also consulted my parent’s financial advisor because I needed all the professional help I could get, and by doing so learned about things like an equity release calculator for when I do eventually get a home. Here are three reliable tips that made it to my savings plan.
Budgeting is unquestionably one of the most critical aspects of savings. I couldn’t save without a budget. This is because I could not even keep track of my expenses, and my wallet was empty before I knew it. Once I started budgeting before spending a dime of my salary, it became more comfortable for me to limit overspending and commit to my savings plan. My budget comprised of my monthly expenses and the amount of money I planned to save. In most cases, it was about 10-15% of my total income.
Being a first-time budgeter was not easy. Therefore, I began using a budgeting tool for more efficiency. I chose one because they are specifically built to take care of all finances, including budgeting and investments. There are many high-quality budgeting tools available today.
Setting goals made it effortless for me to save. I decided that I wanted a specific amount of money in my savings account within a particular duration. Then, I relentlessly worked towards making it happen. It is best to start with short-term savings goals before focusing on the long-term ones. Also, as I discovered, it helps us save for something we want because we are more motivated.
For instance, my first short-term savings goal was to set aside enough cash for a vacation in Bermuda. Believing that I deserved that break and all the fun things I would do during that getaway gave me the much-needed psychological boost to save no matter what.
Learning how to properly differentiate between needs and wants allowed me to prioritize and only spend on things that aligned with my set financial goals. It taught me how to say “no” to actions such as purchasing designer clothes and handbags and dining at the most expensive restaurants in my city. Not buying things I didn’t need to get by was really useful in my savings journey. At the end of each shopping experience, I always had some cash left to put into my savings account.
Note that I wasn’t necessarily being “mean” to myself by refusing to prioritize my wants. I was making a sacrifice, which was worth it because I knew the reward that awaited me in the future, i.e., financial security.
I have been using these excellent tips above to save and manage my finances. With them, financial security is not a fairytale anymore. I advocate considering them for anyone who dreams of securing their financial future, regardless of their age or how much they earn monthly. Consistency and financial discipline are also advisable. Otherwise, one may stray from their savings journey and never relish the perks that come with having money set aside for future use.