How to Save Money and Maintain Financial Goals
Let’s face it – the economy is putting a strain on quite a bit of families. More people live paycheck to paycheck than ever before. More people are looking for money saving tips in order to keep their household in survival mode. We’ve all been at a point in our life in which we need to find ways to cut expenses and live more frugally. It isn’t always easy to make changes and put a few extra bucks into our pockets, but every little bit of savings helps – no matter how minor it may be.
When looking for money saving tips, evaluate your lifestyle. Do you visit Starbucks or a convenience store every morning for that must-have cup of coffee? Do you use your lunch breaks to eat takeout every day? If you’re addicted to coffee or lunch on the go, you’d be surprised at how quickly you can begin to save money. Let’s say that you spend $4.00 on coffee each morning. That’s $20 for the work week. Make coffee before you leave for work, put it in a coffee cup and you’ve just saved yourself some money. And, let’s say that you spend at least $5 each workday on lunch.
That’s $25 each week. If you pack a lunch, you could save $100 each month. The little things that we spend money on each day and never think twice about can really add up. Every little trip to the vending machines for a snack or a soda, that loose change can accumulate quickly. Some other money saving tips will include how things operate in your household. Do you leave a light on when you leave the room? Do you let the TV on for background noise? Do you run the dishwasher or washing machine when there isn’t very much in it? All of those things use electricity.
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Turning a light out or the TV off may not save you lots each month, but you will see a decrease in your electric bill. Electricity rates are always on the rise, so if you can find some money saving tips that decrease your electric bill, the more power to you. Instead of running a fan in your room, open a window a bit wider. When going on vacation, put timers on your lights instead of leaving a few on the entire time that you are away.
Some of the best money saving tips include coupons and looking for discounts. Cutting out coupons can save you quite a bit of money each week. The more coupons that you are able to find and use, the more you save. You may find yourself saving $10 or more on your grocery bills.
Set Financial Goals
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You should understand how to prioritize your financial goals so that you’ll stay pleased and financially stable as you get older in life.
This doesn’t mean that you don’t consider the future of your kids but you’re just setting your financial priorities in order. Set an amount monthly for food, water and shelter as these are your primary needs. You need to think about buying various healthy foods and attempt to avoid unneeded snacks that are unhealthy. You likewise need to do your best in your present job as it’s your source of income to pay for your utility bills, home mortgage or rent, and groceries.
This is where you start setting your priorities straight. A few individuals are so frugal on their grocery shopping, they disregard their health needs just to buy expensive gadgets or airplane tickets for a leisure time. Observe that attending to your own daily needs is your duty and priority to prevent evading the rent or house mortgage, utilities and other crucial matters for well-being particularly if you have a family.
Occasionally this could be the cause of disagreement between man and wife for they’ve different views when it comes to income management. The other mate wants to spend most of the money and isn’t afraid of financial debt while the other one prefers to save something for the rainy days or an emergency.
Be a good role model to your youngsters as they think highly of you as a parent.
Pay your charge card debt if you have any. Paying-off the charge card with the highest rate of interest then followed by the ones with lower rates of interest is the best thing that you can do in order to eradicate your entire charge card debt. Purchase things or goods with cash as much as possible and contain your spending habits.
Prevent over using your charge card so that you’ll be able to continue to have access to your accounts if you truly need it. Some individuals, who were working and never bothered to save for an emergency fund and over used their credit, now have nothing. You don’t want to be in a spot where you’ve no earnings and can’t even access your credit cards because your accounts are closed.
Center on saving enough cash for your emergency fund particularly when all of your credit card debt is paid-off. This is really crucial in case of a job loss or other major unforeseen things that might happen to you or anybody in your family. Avoid the enticement of purchasing things that you are able to just live without and center on building your emergency savings.
Setting your financial priorities should be your principal ambition.
Have a clear list of the crucial things that will cover your monthly expenses and finances and number each item from the highest to the lowest with regards to their importance and need.Step-up your 401(k) or a 403(b) contribution and retirement savings if you already have enough cash savings for your emergency fund. Try to save 15%-20% of your salary for retirement.
Try to save for your retirement before saving for your youngsters’ college education. When your youngsters grow up, they can use student loans, get scholarships or attend a good community college or state university where it’s more affordable. As you consider their future, you likewise need to think of your golden years.
Capitalize on free training opportunities. Attending free seminars and trainings to advance your knowledge is a very good investment for your future. Setting career goals in life is really crucial as the job market is highly competitive. Revise or update your will to make certain that your wishes are secure and accomplished. You need to have estate planning regardless how small your estate is.
Some individuals will just assume that their assets and possessions will automatically pass to their family but without a legal will, the State might step-in and allocate your property or estate. Valuate your insurance coverage. Check whether your car and homeowner policies are updated and their deductibles are fair. You might seek life insurance particularly if you’re the head of the family working full-time. You may likewise think about buying long-term care insurance, to aid you in paying for nursing care or assisted-living when you get old.
Write It Down And Stick To It
In today’s domain there are very few individuals who take the time to produce a personal budget. Some individuals don’t see the value in doing so; others merely have no desire to confine their spending habits. With this in mind, it should surprise no one that the number of personal bankruptcies has achieved an all time high. Individuals have achieved a point in our society where they purchase on impulse with no thoughts to the outcomes. In order to reverse this trend individuals need to become more responsible with their forms of spending. Among the best tools to help a person achieve this conduct is the personal budget.
A personal budget is a financial plan which sets bounds on the sum of money that will be spent on each category of expenses in a given month.
A beneficial budget will take into consideration such elements as: the amount of income being obtained, owed debt to be retired, retirement savings, and an emergency fund.
A lot of individuals have no idea precisely where or how they spend a good portion of their income. How many times have you taken money from the ATM only to realize a few days later that it’s gone? Many times it’s hard to remember how precisely you spent the money, and frequently this money is wasted on frivolous buys. A budget will help avoid this by making an individual accountable for the income that they spend. If an individual only has $50 left for monthly food expenses then they might decide to give up purchasing that fancy $3 designer cup of coffee.
A different benefit is that a budget depicts an accurate idea of how much a person can actually afford to pay for assorted consumer items. Whether it’s a home, a car, or a new TV set, an individual will be able to ascertain whether or not a particular purchase will fit within their monetary constraints. This acts as a precaution against getting in over your head financially.
It’s crucial to realize that merely creating a budget isn’t enough. This in and of itself will do an individual absolutely no good if he doesn’t discipline himself to stick to it.
Occasionally this will very hard, especially if an individual has founded the habit of freely spending without an afterthought. However, the long-run advantages of financial freedom, debt free living, and a comfortable retirement far outbalance any potential difficulty.
List as many of the bills as you are able to identify over a 12-month period.
Now, employ the “one-twelfth” rule, where you put aside funds for these expenses monthly, so as to limit their impact when payments come due.
Next, center on where you are able to spend less money without depriving yourself.
- What uneconomical or indulgent practices can you cut down on? (Cab rides when you are able to walk, expensive lunches.)
- Do you shop for items you don’t require?
- Are you paying too much for services like car insurance, cable or cell phone service?
- Do you have unused memberships (e.g. gym) that you’re
- still paying for (and may sell)?
It’s easy to distinguish between the two if you go by a textbook definition. But actually, the distinction is hard and has been getting narrower over the past few years.
Nowadays, a car has become an emotional need in spite of the existence of an efficient public transport system. The need for an auto has transformed from a status symbol to a luxury to a basic essential now. The same system of logic applies to food. From home food to a fast food joint, nowadays buyers expect a fine dining experience and not just good food. This ambience comes at a premium and individuals just don’t mind paying for it.
The truth is, wants are inexhaustible and often the lines between needs and wants get blurred. Therefore, one needs to get into self-examination before giving into the impulse to splurge.
Let’s presume a family of 4 spends $8,000 on food, $25,000 on shelter, $20,000 on education and $10,000 on transportation. Now calculate the difference between your outlay and earnings. All you have to do is to write the primary price list and the cost of living in your city and compare the areas to give you a truthful picture.
If you require a mobile because you’ve a field job, it’s a need. But if you insist on the latest gadget which you are able to truly afford, it’s a want. That was an easy pick. But it gets hard if you have to trade off an automatic washer for a refrigerator or substitute a radio with a home theater music system… Think about it!
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Among the oldest rules of personal finance is the easy word of advice to pay yourself first. All the money books tell you to do it. All the personal finance blogs say it, too. Even your parents have given you the same advice.
But it’s difficult. That money could be used somewhere else. You could pay the telephone bill, could pay down debt, and could buy a new blu-ray player. You’ve tried once or twice in the past, but it’s so simple to forget. You don’t keep a budget, so when payday comes around; the income just finds its way elsewhere.
To pay yourself first means merely this: Before you pay your bills, before you buy foodstuffs, before you do anything else, allow a portion of your income for savings.
Put the income into your 401(k), your Roth IRA, or your savings account. The first bill you pay monthly should be to yourself. This habit, acquired early, may help you build tremendous wealth.
Once you pay yourself first, you’re mentally founding saving as a priority. You’re telling yourself that you’re more important than the light company or the landlord. Building savings is a potent motivator, it’s empowering.
Paying yourself first furthers sound financial habits. Most individuals spend their money in the following order: bills, fun, saving.
Unsurprisingly, there’s generally little left over to put in the bank. But if you bump saving to the front — saving, bills, fun — you’re able to set the income aside before you justify reasons to spend it.
By paying yourself first, you’re constructing a cash buffer with real life applications. Steady contributions are an excellent way to build a savings. You can use the money to deal with emergencies. You can utilize it to purchase a home. You can utilize it to save for retirement.
Paying yourself first gives you freedom — it opens a domain of opportunity.
The best way to acquire a saving habit is to make the process as painless as conceivable. Make it automatic. Make it invisible. If you arrange to have the money taken from your paycheck before you get it, you’ll never know it’s gone.
The true barrier to acquiring this habit is discovering the money to save. Many individuals believe it’s impossible. But almost everybody can save at least 1% of their income. That’s only one penny out of every dollar. A few will argue that saving this little is non-meaningful.
But if a skeptic will attempt to save just 1% of his money, he’ll commonly discover the process is painless. Perhaps next he’ll try to save 3%. Or 5%. As his saving rate increases, so his savings will grow. If you’re scrambling to find money to save, consider setting aside your next raise for the future. As your income grows, set your gains aside for retirement and savings.
Once you’re imparting the maximums to your retirement (and you’ve built emergency savings), you are able to start to utilize your raises for yourself again. Pay yourself first, my friends. It’s a habit that you’ll never regret.
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