Financial Advice: Strategic Ways to Save Money
Do you feel challenged to find ways to save money no matter how hard you try? You strive to spend less, but something always comes up? We can relate to that. Life gets in the way sometimes – your car needs new tires, family medical emergencies, unexpected house repairs, and more. However, sometimes we tend to overlook that our spending habit also gets in the way.
Learning how to save money is a vital skill everyone should have. Saving is easier when you know how to do financial planning, so here are some money-saving tips and guides we made to assist you in developing a clear, simple, and sensible saving strategy for your short and long-term goals.
Record your expenses
Keep track of your expenses. This may be tedious, but recording is the first step in saving money. You need to record every coffee you order, online subscriptions, online gaming spends, and monthly bills. This way, you can see how much you’re spending in a month and classify what should be cut, prioritized, or deprioritized.
Include savings in your budget
Now that you have a clear view of what you are spending, you can now allocate the cut expenses to your savings. It doesn’t need to be big at first, what’s more, important is you are creating the habit of saving. You can start by cutting 5% of your total monthly income as your savings and let it grow as you adjust your lifestyle and spending habits.
The ideal is 80-20, 80% expenses and 20% savings. You can achieve that if you learn to live according to your means. Keep your money in the bank, especially now that everything is online. It’s easier and safer to open an account. Check out our Easy Savings Account (link); the opening balance is 5,000 only.
Practice good spending habits
If you can’t save as much as you’d like, it might be time to cut back on expenses. Find ways to cut your spending and cautiously practice good spending habits.
Check out your online subscriptions and memberships and unsubscribe from those you’re not actually utilizing. You can also cut back on non-essentials such as entertainment and dining out. It is important that you don’t deprive yourself. The right amount of leisure is important in life too.
Lastly, whenever buying something, ask yourself many times if it is a want or a need. This practice will help you control your impulsive buying habit.
Set your Saving Goals
Saving without a goal is not motivating. You need to fuel up your savings drive so you need to think about what you want to save for. It would be best to establish a short-term plan (1-3 years) and a long-term (4 or more years). Estimate how much money you’ll need and how long it will take for you to save it. You can compute ahead so you’ll know how much you should save on a monthly basis to achieve your goals.
Below are examples of saving goals you can set for yourself:
Short-term goals: Emergency funds, vacation, or down payment for a Car or a gadget.
Long-term goals: usually for retirement, your child’s education, buying a house/extensive house renovation, or anything high value and achievable for years.
You can start reaching smaller goals so you can enjoy the reward of what you’ve saved for. It can give you a psychological boost and a feeling of fulfillment.
Read more: How to Save for your Retirement in your 20s
Know your Priorities
After all the first steps you’ve done, it’s time to plan what saving goal should I prioritize first? This is the time to allocate your savings in different set goals you have.
For Example, suppose you’re in your 20s and not retiring anytime soon. You may allocate more savings on a house or a car down payment or emergency funds rather than putting a lot into your retirement plan. Learning how to prioritize your savings goals can give you a clear idea of allocating your savings.
Choose the bank account that suits your needs
There are different types of bank accounts offered by the banks and they are tailored to fit your needs. There’s for easy savings, investment savings, money builders, all accounts in one, and more.
Opening an Easy Access Savings Account (ATM with online banking) is the best option for short-term goals. This kind of savings account allows you to access your money conveniently and faster. It is good for emergency funds, paying utilities, and more.
It is designed for your everyday use. You should learn ways how to invest money. You may opt to invest in securities like stocks and mutual funds for long-term goals. These investment products are usually available in a universal Bank through investment accounts. In the future, you may also choose to open a bank account with a higher balance requirement and higher interest rate for your long-term goals.
Seek financial advice from a registered financial consultant
If you’re unsure where you want to invest, a financial advisor will assist you in selecting specific investment possibilities for your savings. They will guide you in choosing the best financial instrument based on your risk-return criteria and matching it with the right financial instrument. They will also help you monitor the performance of your investments and more. Seeking professional advice will increase the possibility of achieving your financial freedom.
Money management is vital for your future’s survival. This is what the pandemic taught us the hard way. Emergency funds are important for it provides financial security and flexibility. Remember that having a savings account can save you from debt and future financial crisis.
“Do not save what is left after spending, but spend what is left after saving” by Warren Buffett