You cannot remember how much money you spend each month, and you often get tired when thinking about money, don’t you? You even cannot control your spending habits. If you are in such a situation, practice these 5 simple money-saving tips immediately; they will help you to save more money without impacting your lifestyle.
1. Change the way you think about money
There are 3 common mistakes when thinking about money and money management:
- Being wary, alert, indifferent, or even afraid of money. It is because you often over-complicate money-related problems and think that they are “unhealthy” when talking about money. However, no matter how much you avoid thinking and talking about it, the fact is that you cannot live without money.
- The thought that “I will be good at money management when I earn a lot of money.” You may think that the current amount of money is too little to set up funds and manage them. Keep in mind that the amount of money you have does not matter, it is the way to control the spending that makes you rich or poor.
- The thought that it is cramped and independent when managing money. However, you do not know that you can only be truly free when you are financial independence.
2. Spend under your affordability
This seems to be unreasonable and unnecessary, but it is extremely important to those who want to manage their money effectively. Spending under your affordability does not mean that you are frugal; it only means that you will choose to buy essential items instead of expensive ones to satisfy yourself.
For example, if you earn a lot of money, you can buy branded goods for yourself. However, if you can purchase when they are in sales, do it. If you need a car just for going to the supermarket, why don’t you consider buying a cheap one instead of the Audi Q5?
3. Learn how to budget
To be clear, budgeting is not the same as making a sacrifice for your pleasures. It is just the way you divide your money into different accounts.
To take better control over your money, you should divide it into small amounts for different purposes, in detail:
- 10% for financial freedom: You should spend a small percentage of your salary investing in something to make more money on a regular basis. Creating bank accounts, buying company shares, crediting, etc. are all good ways to make profits from this small amount of money. Never use this account to pay for your daily expenses.
- 10% for rewarding yourself: You can use this amount of money for your pleasure such as a branded shirt, a luxury trip with your partner, or an expensive car. You can accumulate to spend at once as long as you have it as a gift to encourage yourself to work harder and save more money.
- 10% for long-term goals or future consumption: This amount of money should be used for important and long-term expenses such as buying a new mobile phone, organizing a wedding party, etc. If you wait until you need it and spend all of your cash on it, you will quickly fall into a financial crisis. Therefore, determine your long-term goals and start to save for them from now on.
- 10% for education: You will never lose your money when investing in yourself. This amount will be used to pay for courses you want to participate in, buying books and studying equipment, and so on. You should maintain this fund and remind yourself that it is your lifetime goal.
- 55% for necessities: You should spend 55% of your salary for your essentials. If you think that this amount is a bit little, you are wrong. One thing to notice is that even if you earn $10,000 per month, you will still spend it like you earn $2,000 only without any saving plans. You will spend more when you earn more even though you use no more than 60% of your income for your living costs.
- 5% for social contribution: Many people say that they will give away when they earn more money. This is a very common excuse. However, even if you earn only $1,000 per month, you should still spend $5 for social contribution
4. Prioritize your spending
To save more money, you should buy things you need instead of things you like. Also, be smart when deciding to pay for something. If you like reading books, invest in books, bookshelves, and reading chairs instead of building a swimming pool or buying expensive kitchenware.
5. Use financial management tools
- Buy products from websites following the Groupon model. It will help you to save 30 – 50% of your spending.
- Find bargain items on auction websites.
- Track promotion programs of retail companies when you need to buy something.
- Use personal financial management tools. Money management software on the Internet or mobile phone is now available. You can use Quicken, Mint, YNAB, Mvelopes, TurboTax, and so on. These tools will bring you the most effective way to manage your money.
Above are 5 simple money-saving tips that won’t impact your lifestyle. If you have any other methods, please share them with us by dropping your words on the box below. Thanks for reading!