The question “how to save money and stop yourself from losing it” has been confounding people since centuries because it seems to be one of the toughest achievements to aspire for. One can be poor for many reasons beyond one’s control (natural circumstances, macro socio-economic conditions, et cetera) but many people are poor simply because they do not know how to save money and even if somehow they are able to save it they don’t know how to stop themselves from losing it.
Saving money is a lifestyle issue. You cannot just decide to save money and tomorrow you will have lots of spare cash with you; money doesn’t work this way. In order to save serious money you need to have long-term, persistent plans. It may involve multiple steps and actions and it will also involve changing your lifestyle such that you don’t lose more money than you make.
How do you save money?
You can save money when
- You earn lots more than you spend
- You spend quite less than how much you earn
Personally I’m a fan of the first point provided you are not a profligate. Spending money in order to improve quality of life, provide better living conditions to your family members and good education to your children isn’t overspending. If you feel you are not able to save money while trying to provide a quality life to your family it definitely means you should be earning more than you are spending. If you want to save, let us say $ 1000 every month, your earning is (after deducting tax) $ 3500 and you spend $ 3200, you are just saving $ 300 every month. So you need to earn $ 700 more instead of bringing down your cost of living to $ 2500 and depriving your family of a decent life.
On the other hand if you are simply wasting away money by regularly eating out, club hopping and needlessly buying gadgets then you must definitely bring down your spending so that you can save more.
These are some broad steps you can take, but given below are some definite measures that you can take in order to save money and stop yourself from losing it.
Learn to distinguish between needs and desires
This doesn’t mean you have to completely take fun out of your life and start living like a nun, just don’t go overboard. Recently a friend of mine saw the iPhone in my hand and remarked, “I’m definitely going to buy this one for myself”, despite having a good phone. He needs an upgraded computer that can help him speed up his freelance work, and this computer may cost less than the iPhone if he simply upgrades his existing computer. And I told him so. Hopefully he’s not going to go ahead with the purchase of the iPhone when he so totally doesn’t need it.
We normally end up spending lots of money on things we don’t need and the saddest part is the things that we crave so much for don’t mean much after a couple of weeks and even after a couple of days sometimes.
So the next time whenever you are planning to make that purchase seriously think about it whether it is a need or a simple desire. If it is nothing but a desire and that too a costly desire, quickly distract yourself or talk sense into yourself or ask somebody else to talk sense into you.
When it comes to collecting materialistic possessions there is no end and deep down somewhere you know that. Companies need to make money so they keep bombarding you with new offers but it doesn’t mean you have to take the bait.
Have a budget
Create weekly, fortnightly and monthly budgets and stick to them. Take note of your expenses for a month and find out precisely how much you spend every month normally. This may include grocery expenses, school and college fees, travel, health, some investments, bills like TV, Internet and the telephone, et cetera. Once you have made the list, you know that this is what you need to spend every month. Stick to this budget. Also leave some scope for family fun and outings if the situation is not very drastic but if you have no savings then your priority must be saving money wherever you can.
Save money consciously
Saving money must be a conscious decision. When you start thinking of saving money on a regular basis you actually start saving it. You start finding means of saving money and you save it at every opportunity.
Keep the usage of your credit card to the minimum. Your credit card not only puts you under debt you also sometimes end up spending more than you are supposed to because you’re not paying hard cash and you are not paying immediately. Most people go on shopping sprees thanks to their credit cards and later on they end up with many things they don’t actually need and they are also under debt, paying interest on top of that.
Have financial goals for yourself and your family
Coming back to the example mentioned above, if you want to save $ 1000 every month then make sure that you saved this amount every month without missing. Even if this means cutting out on some other expenses, do so. Never miss your financial goals. Have regular meetings with your family members and brainstorm on how collectively you all can meet financial goals of your family in order to save money. Make a list of expenses that you can do away with and with everybody’s agreement, get rid of them. For example do you actually watch all those TV channels you have subscribed for? When was it the last time you used your landline phone number? Since these days you can get every possible newspaper on the Internet, are you still subscribing to the paper newspaper? You will be surprised how much money you can save by removing redundant expenses from your list.
Educate yourself financially
Education doesn’t just keep you informed, it also helps you keep a finger on the pulse of the financial conditions of the place where you live. You must always remain aware of what is the status of the economy so that you can plan your finances accordingly. The economy leaves a deep impact on your savings and the amount of money you spend on food, clothing, health and even entertainment. When you’re totally aware of the economy of your country you can plan your budget and investments accordingly.
Saving money is just like realising the importance of clean air to breathe. In the daily grinds of life we often forget to pay attention to alarmingly rising pollution while completely being aware of the fact how critical it is for us to breathe clean air. The same is true for saving money and not losing it. Unfortunately in many cases its importance is realised when it is too late.