Most people like the idea of saving money, but they don’t know how to do it. Few people might be disappointed when I say there isn’t a best way to save money. The trick that works for me might not work for my neighbor.
However, I can suggest three strategies to save big amount. Select the one that suits your needs. But before you start with reading the tips, keep in mind, all the following tips have one thing in common: Spend less than you earn. If you are someone who loves using credit cards, and don’t want to reduce the usage, these might be very difficult tips. For others, these are simple, and require only a bit of effort to succeed.
One of the core reasons why we aren’t able to save much today is because we all seek instant gratification. Because we can enjoy today by spending more, we don’t bother much about tomorrow. However, if you can manage some discipline, you can enjoy today satisfactorily, along with saving some for tomorrow. Here is how you can do it.
1. Change Your Approach
Most people complain they don’t really understand how and where all their money goes. This is the problem with
everyone. Only days after we get our paycheck, most of the money is gone, and we don’t have any clue about where did it go.
If that’s what keeping you from saving money, why don’t you change your approach? Instead of trying to save cash till the end of the month, make arrangements to get money directly into your savings account. One such way is to open a 401K account, which pulls money every month from your paycheck before you even get the chance to splurge it.
If you don’t want to put money in your retirement account, you can have this facility in mutual fund investment. Most companies offering funds have this facility. The money they deduct from your savings / checking account goes directly into the fund. You can start with as low as $100 each month.
From my personal experience, as an investor and as a financial advisor, I can say this method really works. It would be a bit difficult initially as you have to lower your budget. After a while, however, you would be accustomed to it, saving lots over time.
2. Reward Yourself
Although we know saving money would help us in future, we don’t get anything in present, which keeps us from being motivated. As mentioned earlier, we seek instant gratification. So, we obviously get attracted to things that provide us benefits now.
How about rewarding yourself whenever you save some money? If you are able to save $250 a month (that is $3,000 a year), reward yourself with dinner out, or a movie ticket. This may seem to be quite contradictory. You save at one end, and spend on the other. The ratio is, however, low. You save much more than you spend rewarding yourself. And if you reach your yearly target, give an extra boost to your motivation by investing $3,000 into some good financial products, or buying something worthwhile.
3. Save Big Money
Simply glance through all personal finance blogs and you would realize all of them suggest saving small amount every month, which would eventually be a big amount. They say, if you save $50 every month for 10 years, you can get $6,000. Now that’s not an amount to sacrifice small pleasures of your life. Besides, I don’t thank many would stick to such discipline for long time.
A quicker way to save big money is reducing your big ticket expenses. Instead of buying the latest, stylish new car, opt for a used one, if commuting is your only purpose. Similarly, if you don’t need a bigger house, opt for a smaller one. This will have to save lots, without diminishing your daily lifestyle.
Doing efficient research before buying such things is the key to save more. Some more things you can do to save money is reconsidering whether or not you need cable connection, comparing prices and features of each item, not missing payments, and so on.
There are many ways to save money, and we read articles about them everyday, but most of them are not applicable either because they are not practical, or they are simply mundane. I hope the ones I suggested were not amongst them.
