Many people worldwide are completely unaware of how to save money for long-term goals. They are accustomed to living from paycheck to paycheck, spending all their capital, regardless of the amount of salary they receive. There is a well-known paradox: the higher your income, the more needs and, accordingly, expenses. If you are currently having money problems, you can get a quick loan online from the reliable and secure Payday Depot. In fact, you can learn to save money even with a small income if you follow 5 easy ways.
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Where to start planning to save money?
The basis of any savings is financial planning: it is necessary to keep track of expenses and income, predict future income and expenses, and learn to think ahead. First, you need to set yourself a clear financial goal. It is important that this goal is significant enough to motivate you to achieve it. So, set a goal and determine how much money you need to save and how much time you are willing to spend on it. This will make it clear how much you need to save monthly. It is also important to understand that it is impossible to save for everything at once. It is important to distribute goals according to urgency and importance, assign them priorities, and fit them into a financial plan. Finally, try simple but time-tested steps to save and reach your financial goals.
Six Jugs Method
The six jugs method involves distributing cash receipts into six categories: living, savings, entertainment, education, major purchases, and gifts. They can only be spent in accordance with the purpose of the category. The jug in this case is a conditional concept: cash can be distributed in glass jars, boxes, and envelopes, and non-cash money can be distributed in six separate bank accounts.
- 55%. These are costs for utility bills, food, transport and communications, clothing, household goods, etc. Thus, it is important that all expenses for everyday life amount to half your salary and no more — this is the only way to save money for your main financial goals. The main thing to understand is that you will be able to save only if you spend less than you earn.
- 10%. This is savings for a rainy day or for unforeseen expenses in the future. To get rich or learn financial literacy, it is imperative to keep savings to be safe from sudden bankruptcy. No one is immune from unforeseen situations that can entail huge expenses; your salary cannot always cover these expenses, but the capital accumulated on time will definitely help you with this.
- 10%. These are large purchases that we resort to sooner or later, for example, such as buying a TV, refrigerator, car, real estate, or opening our own business. It is better to save the amount for such a purchase for several months so that it does not hit your monthly budget and does not leave you without money.
- 10%. This is learning and self-development. Even if there are no school children or students in your family, these expenses are important. These may include spending on a favorite hobby, foreign language courses, or advanced training. It is important for any person to constantly develop and improve throughout life, so having this part of your savings will help you develop yourself without damaging your wallet.
- 10%. This is entertainment and spending on any of your desires. You can spend this percentage of money from your salary without thinking twice. You deserve to think beyond savings and big financial goals and relax and take a break from financial responsibilities.
- 5%. These are gifts and charity. There are always some holidays and birthdays, and it is better that for such occasions, you have separately set aside money for gifts. If there are no holidays coming up this month, spend that percentage of your money on charity.
Thus, if you use this method correctly, you will be able to avoid debt and will have enough money for daily expenses, recreation, and hobbies.
Automatic Piggy Bank Method
The automatic piggy bank method is based on the principle of automatically writing off a certain percentage of income for savings. It is especially convenient if your bank provides an automatic replenishment service for your savings account and independently debits a certain amount or percentage from your salary to a separate account. If you can’t automate the process, you can set a monthly reminder on your phone on payday and manually transfer some of the money to a savings account.
To effectively implement this method into your life, you should set a small percentage of deductions. For example, start with 1-3% of your monthly income and then gradually increase the amount of contributions. Secondly, do not get into the piggy bank ahead of time, that is, before you have collected the required amount for basic financial goals.