If you search online on “tips to save money”, you would find thousands of search entries with tips and guides to help you save more. Truth is most of them do not cover the foundation on the issue of you not been able to save.
When I started earning money, I started scouring the internet on tips that would help me increase my savings but none of them seemed to help. What I came to realize is that even with the best tips, you can fail to save if you don’t have the right systems set into place.
Two things you would need to save money – a dependable system set into place and the right mind-set.
In this article guide, I would show you tips to save money even if you are an impulsive spender. These money saving tips would be practical, actionable and help you in your goal to save more. One thing you should remember while reading this guide is that nothing comes easy, you would need both determination and hard work.
Let’s dig into the article proper?
What is it that prevents you from saving money?
Fear of past financial mistakes or FOPFM is one the reasons a majority of individuals find it really difficult to save. Thoughts of your past financial mistakes might be one of the reasons you might be one of the reasons it’s hard for you to save.
Truth is that dwelling on your past mistakes would only serve as a barrier and hold you back. You shouldn’t dwell so much on your mistakes because most times it stops you from moving forward. The only thing you do with your past mistakes is reflect and get valuable lessons from them so you don’t end up making the same mistakes.
You should learn how to embrace your past and use them as a stepping stone to actualize your goals which in this case would be to improve your money saving ability.
How to track your spending with ease
Reading articles on tips to save money would be futile if you don’t have an efficient way to track your spending. If you want to become the boss of your money, you would need to change your actions with money.
You have to create a budget and also stick to it – and the key to doing this is by tracking your expenses.
Steps to track your expenses
Step 1: Create a budget
Simply put, there would be nothing to track if you don’t have a budget. What then is a budget? A budget is a financial plan for a defined period time. It would include figures such as revenues, profits and expenses.
To be able to save money efficiently, you should control your budget and not the other way around. A budget is created so that you can make sure that you are spending your money only on the essential things.
The three steps in creating a budget:
- Write down how much income you earn in a month.
- Write down your expenses for the month.
- You should start with necessities such as food, shelter (including payment for mortgages, rents and utilities), clothing and transportation.
- After you are done with that, you can now budget for things like entertainment, streaming services, gym memberships and most importantly saving.
- NOTE: Your income minus your expenses must equate to zero. If after doing the maths, it doesn’t work out, adjust your expenses until it works out because that is the only way you would be out of debt.
TIP: They are many tips on how you can set up your budget, but for now that is a summary. Maybe I would write an in-depth article on how you to set up a budget another time.
Step 2: Have a record of your expenses
This should be done every single day. It shouldn’t be on an on and off basis, you should be very consistent with this. If you don’t keep a track of your expenses, you would be living in a world where your wallets is always full and you have enough of stocked up for the winter. That is a fantasy world. In the real world, we keep a track of our expenses.
TIP: If you live with a spouse or partner, you should also help to understand your budget – what and what the money is meant for. That way, you both would be on the same page. You wouldn’t want them to spend the money you set aside for utilities and a spa trip.
Budgets are blown to shreds when you don’t track and also watch your expenses.
How can you track your expenses?
Four steps you can take in tracking your expenses
1. Pen and paper method
Old school still works! A lot of people still make use of this method. Of course it has both advantages and disadvantages. The advantage to this method is that writing things down physically makes your brain active. When dealing with money, you need an active brain.
The disadvantage to this is that it might be difficult to keep track of all the papers. You might misplace the receipts or even forget to write them down (especially the little errands you go on during the day). You might even forget to write down some of the purchases you make on your card. These little slip ups can affect your budget and saving negatively.
2. The envelope system
The system can also be called the “pay cash in person” method. In this method, you label envelopes with the categories of your expenses on your budget. Groceries, entertainment, utilities are an example. When you want to make payments on groceries, you take the labelled envelope for expenses. When the envelope becomes empty, you stop spending. In that way, your money tracks itself.
The disadvantage to this is that making all your payments via cash can be very inconvenient. Plus with the rise of technology and e-commerce, in some instances cash isn’t even an option. The one advantage to tracking your money via this method is that seeing the envelope deplete gradually increases your sense of responsibility.
3. Computer spreadsheets.
We live in a digital world, so why not go digital? Spreadsheets comes with a lot of advantages – an abundance of templates, customizability of budget, the joy of seeing your maths being solved on an LED screen.
With every other thing in this world except chicken wings dipped in hot sauce, they are disadvantages. If you are not diligent in entering your expenses in the spreadsheet daily, then your budget is no longer a budget – just a spreadsheet filled with numbers.
A lot of people believe that since they spend a fair amount of time on their computers, a spreadsheet is the best answer. They forget the one thing that follows you everywhere, even into the toilet – your phone. This brings us to probably the best option for tracking your expenses.
4. Budgeting Apps
Budgeting apps are simply amazing, they give you both accountability and ease. Since this is not an article, I would just give out a simple list of the top budgeting apps online with the most favourable reviews. These apps are sure to keep your personal finances under control.
Why you keep failing at saving
Saving money isn’t as easy as reciting ABC. If it was, a kindergartner would do it too.
Some people find it very easy to save money while some find it easy to spend money. If you are an impulsive spender embrace it, instead of denying it. The mistakes that most people make is that they try to save 60 to 70 percent of their income in one go. Saving money is not race. Your saving should mostly gear towards retirement and making large purchases.
A lot of people fail at budgeting because they use the same system for people that are frugal. People that can’t save money also need to be rewarded for their hard work too right?
Here are some steps you have to put into place if you’re a big spender:
- You should save 50% of your money that is available after you have made expenses.
- After you have saved, buy only nice things.
- You should automate your saving with automatic bank transfers.
Tips: If you must spend, buy things that are only important to you.
Remember that you can afford anything but not everything
How to make sure you don’t fall into debt
You should look at finance as a game. One side of the game involves you earning money; at the other end of the spectrum involves your savings. How do you know if you have won? Not by how much you earned but how much you earned. Research have shown that they 60% of Americans are spending all of more than their income (source).
The question now is how can you separate yourself from than 60%?
By not increasing your debt. A good way that you stop accumulating debt is by paying for your transactions using cash. It might be difficult if you depend so much your credit, but is worth the effort. Using cash help you reduce your credit card debts, and it also helps you to be conscious about what you buy.
Let’s say you want to buy a 500 dollars shoes, you would think twice about buying it even if you had the money. 5 out of 6 people who use credit cards are impulsive spenders. Using cash helps you to spend more and save less.
Tips to remember:
- Saving money is an art. If you save too much money you would want to quit, if you save too little you would have to pay for it in the future.
- You’ve read tips to save money now, but it isn’t that easy. It takes the efforts and the right systems in place.
- You should also brainstorm which goals you would be able to achieve if you had some extra money saved up each month. These goals would serve as a motivation to move forward and save more. Imagine what a few extra thousand dollars can do for you.
No need to wait any more second? Go and start making money and you would be surprised how far you can go.
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