It’s so much fun to splurge and pamper yourself, especially after a hard day’s work. Spending on loved ones and ourselves are fine, but it’s important to have savings. Here are 3 simple but effective ways to save money without making drastic changes in your life.
Track your money
If you want to save money, you need to know how much you earn and how you spend it. You have to start itemizing your spending – the more detailed you are the more effective it will be. Many people are put off by this practice because it’s cumbersome but also nerve wrecking. When you note down your expenses from huge shopping spree down to the Starbucks latte you get every morning, it will help you see clearly where your money goes.
“Having that kind of visual snapshot of where you stand financially can serve as a powerful in-the-moment gut check when asking yourself questions like, ‘Can I afford it?’ or ‘Is this purchase going to bring me closer to or push me further from my goals?’” says personal-finance expert Stefanie O’Connell. Tracking your spending will help you save in – it will tell you what expenses to cut and give you a reality check that will stop you from impulse purchases. Check out erincondren petiteplanner – budget book if you are a fan of penning things down or online budgeting tools such as Mint and You Need a Budget.
Pay off debt
Before you are able to save money, you need to clear your debt first. Do not feel disheartened if you have quite a hefty sum. Many actually end up spending even more because they feel despaired over the debt they are in. The action doesn’t make sense. Experts explain that people who try to get out of debt end up spending more due to the guilt of overspending and stress of needing to clear the debt. So, curb that emotional spending to make sure you don’t fall into that vicious cycle.
There are two basic strategies to tackle debt: pay off your highest-interest-rate debts first, or pay off your smaller balances first according to thecut.com, an international lifestyle website. Paying off your smaller balances is known as the snowball method that was popularized by financial guru Dave Ramsey. List your debts according to balance, then tackle the smallest balance first while you make minimum payments on all other debts. The idea behind this method is that the success of clearing one debt will motivate you to continue clearing other debts. However, if you have a debt that has an incredible high-interest rate, it makes more sense to tackle that debt first. Whichever way you choose, remember to be logical about how you approach your debt.
Pay yourself first
“PYF . Pay yourself first,” suggests Samuel Rad, a certified financial planner and instructor at UCLA. “This is the idea of always cutting out a part of your paycheck and putting it aside before you spend money on other things.” Once you get your paycheck, make it a priority to pay your non-negotiable such as house and car loans, insurance, and utility bills. Then take 10 percent out as savings. Once you have done that, you will know how much you are left to spend. The 10-percent rule of thumb is a guideline so you can adjust accordingly. Once you have clear up your debt or have adjusted your expenses, then you can aim for the 10 percent saving plan.
Monica Leong is a storyteller at heart. Graduated with a Journalism and Public Relations degree, she is currently working in corporate communications and also contributes as a freelance writer and editor. Before entering the corporate world, she worked in female lifestyle magazines such as Marie Claire, CLEO, and PEARL as an editor and a features writer. Monica is passionate about writing and working on a short story and flash fiction anthology.