Always running out of funds? Seems like both ends will never meet no matter your effort? Your monthly paycheck is not enough for even just a week and the bills seem to never end? Well, guess what? You’re not alone. Almost everyone experiences the same dilemma. I have heard a lot of people complaining that they have difficulty managing their finances. This is why I decided to share a little tip on how to make the most of your hard-earned money. I’m not claiming to be an expert at this but having done it myself; I sure find the following steps to be effective.
1. Set a Goal
What is that thing that you most dream of having in the future? Is it a house or a brand new car? Ask yourself these questions. If you got the answer, take it as an inspiration. Having a goal will give you the motivation to save up more money. However, setting up a goal is not enough, you also have to put your full conviction that you will achieve it otherwise it would just be a waste.
Setting up a goal also involves planning. How many years or months would you want your goal to materialize? Computation contributes a lot in every planning activity. For example, your aim is to own a brand new car in two years, you must plan your savings habit by taking in consideration the amount of the car in the future. That, coupled with the given interest rate of your savings, can help you compute the required monthly savings. Many financial consulting companies are currently offering these services.
Questions like “Do I need these?” “Is it really badly needed?”can do a lot to determine your priorities in terms of spending your money. Ask yourself these questions everytime you pick up an item on display in department stores or groceries. One of the things that impulsive buyers fail to take into consideration is identifying needs from wants. For example, you badly need a jeans but a dress catches your attention at first glance. That doesn’t mean that you have to purchase it right away. What if you don’t have shoes or accessories that would match with it? Of course, you would purchase those things to compliment the dress that you just bought which simply put is an additional expense.
4. Savings Formula
Income – Savings = Expenses
The above formula suggests a habit of setting aside a certain amount from your monthly/weekly/daily earnings before allocating the remaining for your expenses. This is somewhat closely related with planning. By following this savings formula, you can plan the amount of money you will save each month/week/day. I say it’s a habit because you have to do it again and again until it would become a routine and doing it would be like the most normal thing to do.
All of the above steps will be worthless without this final step. Without self-discipline, you won’t be motivated to reach your goal. With self-discipline, you can materialize your plan, stick with your priorities and following the savings formula will be a whole lot easier. It’s like the bond that holds all of the above together.
So folks, the next time you will think that saving money is only for those who has a lot to spare. Well, you better think again.