4 money saving hacks that are bound to make you rich
Who doesn’t want financial freedom? Everyone does. But, in spite of aiming for it, many people end up struggling to save money.
Have you ever started a month with a resolution to save money by spending only on necessities, staying away from sales displays and expensive outings, and monitoring your expenses? And, despite a strong start to the month, you ended up giving in to your shopping and other cravings; and as a result, you spent more than what you wanted to? Such months are a common occurrence in most people’s lives. There’s no point beating up yourself as this happens to everyone. Savings is the first step in the path toward financial freedom. Many people fail to save because of a variety of reasons. From an emotional state of mind to poor budgeting, various reasons result in high expenses and low savings. Understanding of your spending habits and planning right can help you save money and gradually grow richer.
Today, we take you through some practical money saving tips that will help you achieve financial success, while not compromising on your happy moments.
1. Identify and curb your spending triggers
How many times have you been tempted to buy clothes or spend on dining at the newly opened, popular restaurant? Millions of times, right? Apart from our temptation to splurge, various other reasons trigger us to shell out money. Mood, environment, and peer pressure prompt people to spend lavishly. Our state of mind can make us give into impulsive expenses. For instance, many people who are upset or stressed feel better by having good food or going on a retail therapy. Furthermore, if you are in a shopping mall or your favourite store, then it may prompt you to splurge on things you do not need. Peer pressure is another factor that triggers spending. Most people tend to spend extravagantly when in a group of friends.
Identify what makes you spend your money. If it is your emotional state or temptation, then you may want to sleep over that urge or stressful day to curb your expenses. If it is peer pressure, then you need to learn to say no if you can’t afford to spend as lavishly as your friends do.
2. Ditch the plastic money
Credit cards were invented to save people in situations where they run out of cash. But, today, it has become a tool for overspending. When people do not have enough cash, they resort to their card to make the purchase and save themselves from embarrassment. You hand it over to the salesperson unaware of how much it can cost you at the end of the month! With cash, this is not the case. You feel the pinch when you spend cash as you physically see the amount you have and the expenses you make. Keeping a tight hold on money usage is vital to limit your expenses and increase your savings. Carrying only cash when you head out can be helpful. Estimate the amount of money you will need in a particular day and carry only that with you. For example, if you think you will need $250 to last the entire day, then take that much money only and leave your cards at home. When you won’t have you cards, you won’t be able to pay for things that you had not anticipated.
3. Draw a monthly budget
Not being aware of where your money goes and not having a plan to track expenses is the biggest reason behind overspending. Budgeting every month is vital to curb expenses and achieve financial freedom. When budgeting, first, list down your monthly income. This includes income from all sources, be it your job or any other passive source. Then target your income toward savings and expenses. Prioritizing your needs and expenses is essential to have a healthy financial plan. If you have debts, you would want to get rid of them first. So, they are a priority expense. Necessities are another important expense. Depending on whether you aim for retirement savings, child’s education, buying a home, or any other need, target your money to the required investments. Once you have a budget in place, track it every month. Chances are you may end up spending more than you had in the beginning. The budget will help you spend wisely and lead you toward financial freedom.
4. Follow an envelope system and set short-term financial goals
One of the best ways to avoid thoughtless purchases is by giving each dollar a home and setting short-term financial goals. Once you have a budget, you know the amount of money you have, as well as your monthly expenses. Create envelopes for each category and load it with the necessary cash. For example, make different envelops for rent, debts, utilities, groceries, entertainment, and all the necessary expenses. This won’t leave you with extra money and help you be mindful of your spending. Short-term financial goals like ‘I will minimise spending on eating out’ or ‘curb spending on expensive coffee outings’ or ‘will spend only a particular amount on clothes and accessory shopping’ etc., can help you set a limit and reduce expenses. Make sure these goals are attainable and realistic. Lastly, post them somewhere visible to remind you constantly of them.
Financial freedom doesn’t happen overnight. It takes time and dedication toward good financial habits to enhance savings and be able to afford anything without worrying about the expenses. Don’t be hard on yourself and use these money saving tips to be financially independent.
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