Isn't payday the best day of the month? You get your hard-earned money in your account and can buy that dress that's been collecting dust on your wishlist, or go on that trip you've been daydreaming of. As much as you should do all of that, at the back of your mind, you also know you need to save some of that ‘moolah’ for the future. You never know what tomorrow holds, so the least we can do is be prepared for it, at least financially.

If you have hard time-saving money then we have the perfect learning pathway to help you, Finance Pass: Personal finance made easy. In this detailed course, you will learn all about how you can save your money and secure it for your future and your loved ones.

PowerPass also includes more such courses where you can learn about everything from budgeting, insurance, emergency funds and investing in the right mutual funds, and much more.

And if you’re looking for 7 tips that your 50-year-old richer version will thank you for, then keep reading on because we’ve got just the right tips for you.

Index

  1. Set your goals
  2. Know your priorities
  3. Keep an expense tracking book
  4. Draw a budget
  5. Separate desires and needs
  6. Cut your spending where you can
  7. Switch to auto

Set your goals

A great way to motivate yourself into saving money is to set financial goals. If you know what you want to save for, you’ll be better able to better manage your expenses. Begin by compartmentalising your short term and long term financial goals. Then calculate how much money you'll need to set aside for each goal, and set a deadline for it.

Some beginner goals to get you started include:

  1. Short-term goals
  2. Car payments
  3. Emergency funds
  4. Vacation savings
  5. Long term goals
  6. Property purchases
  7. Business investment
  8. Retirement planning

Know your priorities

Now that you have some goals in mind, start prioritising them. You must decide which goal is the most important to you right now and which can be pushed to later.

Assume your goals are: A new laptop, phone, retirement planning, tax savings, and wedding planning.

Based on your needs and current priorities, you can prioritise them and divide your savings accordingly:

#1 -> Purchase a new laptop

#2 -> Tax preparation

#3 -> Purchase a new phone

#4 -> Wedding preparations

#5 -> Consider retirement planning

This priority method will assist you in better compartmentalising what needs to be your immediate focus and what can wait.

Keep an expense tracking book

it's pencil and paper or a spreadsheet, everything’s easier when you write it down. Maintaining a record of your expenses will help you figure out how much you’re spending so you can better strategise savings goals.

When creating categories for your expense tracking, a good rule of thumb is to include the following divisions:

1) Housing and utilities

2) Transportation

3) Food

4) Healthcare

5) Cost-cutting measures

6) Personal expenditures

Organise your data by categories and total each one. Check your credit card and bank statements to make sure everything is included in your expense tracker.

Draw a budget

Now that you have an idea of your monthly expenses, you can create a budget. Your budget tracking should show how your expenses compare to your income so that you can plan your expenses and avoid overspending. Only add expenses that are recurring, and not one-time expenses like AC repairs. Identify a reasonable amount as your savings goal, work toward reaching it and create your financial plan.

Separate desires and needs

We all have needs and desires, but the difference between those who are able to follow through with good saving habits and those who can’t is -

Prioritising desires > needs

Concentrate on diverging your expenses toward your needs, and you will start saving much more money than before.

Example:

  • Going out to eat every weekend is a want, whereas getting a washing machine is a need.
  • Buying those limited edition shoes when your shoe rack is already flooded is a want. Whereas replacing your torn socks with fresh ones is a need.

Cut your spending where you can

If you are unable to save as much as you would like, it may be time to reduce your spending. Determine which non-essentials you can cut back on, such as entertainment or eating out. Start looking for free fun activities, cancel subscriptions you don't need, cook at home as much as possible, and so on.

To get started you can try:

  1. Replacing expensive restaurant dinners with candle-light dinners made at home
  2. Replacing OTT subscriptions with free theatre/drama shows in your town
  3. Replacing expensive smoothies and nutribars with fresh fruits and nuts at home

This way you’ll start replacing unwanted expenses and start saving more.

Switch on auto

These days all banks provide an automatic saving option, where an amount of money specified by you is locked into your savings automatically. Trying to save at the end of the month might not be the best idea because chances are there won't be much left, so transferring a portion of your income to your savings account automatically will ensure your savings goals are 100% met.

These are some insightful and important tips that can help you save a lot of money in the long run. If you wish to learn more about how you can save money you can register for our “Finance Pass: Personal finance made easy” course to help you save for a brighter future. We also have a number of other finance courses in the works, such as budgeting, insurance, emergency funds and investing in the right mutual funds, to help you become your most financially independent self.

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