Most times when we think of budgeting and all the things we would have to cut back on, it doesn’t seem like a very pleasant idea. Trying to save on the other hand may not seem feasible to you, especially if it looks like there’s nothing to save. Trust me, I’ve been there.
Not to worry though, on this post we’ll be discussing various ways that work to help you save, the best methods that have been vied for by industry professionals, and what works for this baby girl right here.
Let’s get into it!
Have a budget
Is this really necessary? Yes my dear, as air is to your body, so is budgeting to your financial health. Sticking to a set budget might be challenging at first, but it pays off in the end. To set a good budget though, you need to understand your expenses and income well. Which brings us to the next.
Calculating your finances
Not everyone can calculate entirely how much they spend or how much comes into their pocket every month. Even I did not always see the need to, “There’s no point” I thought. The thing is, if you understand your income and expenses, it becomes easier for you to manage your money the best way.
The way to take charge of your finances is to understand your total expenses and subtract that from your total income. To do this
- Keep track of your expenses as they happen for at least a month, or try to calculate it through all your bills, receipts, and bank statements. An expense tracking app could help with this.
- Calculate your entire income including cash gifts, bonuses, etc.
- Deduct the total amount of your expenses from your income total.
Here’s an example,
If your income is greater than your expenses, great! Because that means you have money leftover to save, but if this is not the case and your expenses are greater than your income or even eual to your income, then you have to cut back on your spending.
How do you cut back on your expenses and have something left to save?
Here is where you put your budget to work. Once you’ve figured out how much you’re spending and earning, it’s time to take the necessary steps to get your finances in order.
Slash unnecessary expenses
Speaking from experience(not a funny one), there are so many things that we spend money on that are just unnecessary. They’re there, just like I advised in my affordable clothes guide, find them and slash them. Choices on what to cut out are very personal, so lay it all out and set your priorities in order.
Get debts under control
Recognize the difference between good and bad debts. If you absolutely have to be in debt, let it be for something that pays off the debt. For example, a loan taken out to fund a business is good debt, because it is being used for something that would eventually yield profit and pay off itself.
Being in debt for the purchase of a car or clothes and things that eventually reduce in value after purchase is bad debt (trust me, I know 😉)
The simple rule is that if it increases your net worth or has future value, it’s good debt. If it doesn’t do that and you don’t have the cash to pay for it, it’s bad debt.
Making a plan to save automatically at a fixed period of time makes it easier for you not to back out of saving. There are various applications to help you with this.
There are new and free tools and apps out there that will show you ways to manage money as well as do all the hard budgeting and computational work. There are many available apps to help you track your expenses too.
Gain financial knowledge
Knowledge is power, follow financial pros on your social platforms. It’s the easiest way to getting financially educated.
The key when researching which expert to follow is to carefully pay attention to what they say, absorb it, and only take the pieces of advice or guidance that can really help your case.
So start now, no matter how little you think you’re earning, I know how discouraging that can be. Practice delayed gratification, imagine how sweet that cocktail will taste and the feel of the sun on your face on that next vacation, the one you now can actually afford.
I know I’m looking forward to it😂