Saving money is an important skill to prepare you for your financial success. Saving money is not always easy but it is possible. It is kind of like losing weight. We all know what we need to do, eat less and exercise more, or in the case of saving, spend less and make more money.
While saving money is important task everyone should master, it seems to be one of the most difficult things for people to do. It may take a significant commitment and budgetary responsibility, but having a bank account with savings in it can reap financial and psychological rewards.
Having savings on hand can relieve the pressure of the ‘what if’ scenario. Unexpected situations that require financial support happen. Emergencies, illnesses, and job loss all have a significant financial reach. Having a well-heeled savings account can head off a financial crisis when an emergency situation arises.
Overspending, or making purchases that you can not afford result in overdue credit cards and hefty interest charges. Having extra cash will prevent borrowing money and those unwanted interest charges.
So, how do people save money?
- Track your Spending
Make a tally of all the things you spend your money on. These expenses will include the constant expenses such as rent, mortgage, car insurance, car payments. Other expenses such as electrical, water, gas, groceries, may fluctuate from month to month but are usually around the same each month and can be estimated. Also keep track of other expenses such as coffee, meals out and entertainment including movies, DVD rentals and gym memberships.
Figure out your income. This includes your monthly salary after taxes, commissions, other secondary jobs and any investments.
- Determine the Surplus
From the above income and expenses, you can figure out the surplus. Subtract the expenses from the income. This will show the amount that you can deposit in a savings account. If your monthly expenses exceed your income you should review the expense tally sheet and see where you can reduce your spending. It may be as simple as cutting out the morning coffee or having a night in instead of going to the movies for a few months.
- Find Simple Ways to Trim Your Daily Expenses
Decreasing your daily expenses can have lasting results on your bottom line savings account. Implementing a few cost saving measures can increase your dollar value in the savings department.
• Take your own lunch – Brown bagging your own lunch rather than spending $10 – 15 a day for a restaurant meal can add up to significant savings. Add onto this your morning muffin and afternoon coffee, you will save more and probably be healthier.
• Park the car and take public transit or car pool – Depending on your commute and availability cutting back on driving can save on your gas, parking and on the wear and tear on the vehicle.
• Dine in and make your own meals - Dining out and take out food can be eliminated from your expenses and save a whopping $200 per month.
One of the biggest benefits of saving money is having more money! And who doesn’t want that, Donald Trump?