Saving is everyone’s goal. But when it comes to walking the talk, not everyone is successful in this feat.
In a post by CheatSheeton April 2017, almost 25 percent of Americans have less than $100 in their savings. Simply put that if a person who belongs to this group is caught up in an emergency situation and he needs to shell out $100, he wouldn’t be able to pay for it.
When we think of saving, we easily correlate it to losing our much-loved “freedom” – the freedom of going out with friends every week. The freedom of not being able to shop on a mega sale. The freedom of not being able to upgrade to the latest iPhone.
While saving requires some sacrifice, it does not mean that you are forever forbidden to give in to some of your guilty pleasures. In fact, one key to be consistent with it is to reward yourself a little from time to time.
Here are a few saving tips to get you on you started:
The 20/30/50 Rule
This rule helps you divide your take-home money into these three main categories to help you set a monthly budget: fixed expenses, financial goals, flexible expenses.
20% – Financial Goals
This includes three key parts: emergency funds, savings funds, credit card debt payment funds. Setting aside 20% of your income for these things will help you build a stronger financial foundation. These are very important payments and contributions but sometimes, the ones we attend to the last.
Your financial goals also include priority savings such the down payment for a home or if you are planning to refinance your current mortgage.
Although it takes only a fifth of your monthly income, this could be the most important category among the three. It ensures financial stability in the long-term.
30% – Flexible Expenses
Your grocery, gas, entertainment and leisure, your shopping and other wants will take 30 percent. Your flexible spendings should be budgeted to up to 30 percent. It is up to you on how you spend the money.
This allows you a healthy room to still enjoy some the things you love doing or planning to buy. Even if this part of your spendings may vary, remember, you must not exceed the 30 percent cap.
50% – Fixed Expenses
Bills that are constant every month fall under the fixed expenses. And because these expenses don’t vary that much, it is easier to set a fixed amount from your monthly income.
Mortgage and car loan bills, utilities, and insurance premiums are under this category. Your gym fee and other subscriptions fall into this category, too, as these have fixed amounts payable every month.
Since 50% is a large amount, this is also where you could try to make room in your budget. If there are subscriptions you can cut out, such as that Netflix subscription, this can leave you enough room for other stuff. This should be where you adjust the budget first, and the budget on your financial goals last.
Turn off the TV
Sounds like a bummer! Where’s fun in that!?
According to a report in The New York Times, a studyby a University of Maryland professor suggests that happier people spend lesser time in front of the television.
While turning the TV off allows you more time for socialization and active play, it also makes your savings account happier!
This technique hits two birds with one stone: it lowers your bills (both electric, and subscription bills if you choose to downgrade your cable service) and lowers your exposure to ads inciting you to spend more money instead of saving.
This can be a small act, but it is a big way to save cash.
Invite Them Over Instead of Going Out
How many times in a week do you dine out with friends? How many times do you take your wife out on a dinner date?
While it is okay to splurge from time to time, reducing the times you go out will help you save more money.
Here’s a tip: Invite them over. Instead of paying for expensive dinners a couple times a week, try cooking at home more often. This way you have not only saved from food, but also from gas.
Moreover, there is always something more special and intimate when cooking for your friends or loved ones.
There are many ways to save money, but to be consistent and determined on actually saving can be a little bit of a challenge. Being creative and setting realistic goals that still allow room for a little splurging can help you stay on track.
Remember that saving must be the priority, it should come first. Putting it last when you make your budget will compromise the chances of saving. Also, set aside the money you intend to save at the beginning of the month, not at the end where your finances could like be exhausted.