How to build the habit of saving money?
The dream of buying a new car or apartment can come true, even if you are not a millionaire. It’s enough to collect the required amount, and it’s all good to go. Although it is difficult, it is much more profitable than taking a huge loan from a bank. To learn how to save money, you should know and follow some simple rules of ABC of finance.
How to stop spending and start saving money
Here are some tips to help you manage your finances and start saving money:
- “Pay yourself first” is the golden rule, which implies that you must first set aside a certain amount from each cash receipt and only then distribute the rest. Put aside 1-5% of your salary, gradually increasing this figure. At least 30% of bonuses and property sales should also be set aside. Saving money shouldn’t bring you discomfort but ease, in this case the habit will definitely be build.
- Calculate expenses — it is recommended to start recording your expenses, then analyze the results and draw up a budget for the next month. It is better to save money for large seasonal expenses in advance. When you start tracking expenses, analyzing and managing expenses, there is a 90% chance that the very 10-15% of income that you want to save will be released.
- Set goals. It's worth deciding what the funds you want to save are for. State your goals clearly, be as specific as possible — what, why, and when. This will make it clearer how to effectively move towards your goal, and how much you need to save every month.
- Find ways to save money. You can take advantage of special offers of banks, issue cashback cards, with which you will be able to return part of the money spent to your account.
It’s also recommended to find an additional source of income, for example, try to sell things that you haven’t used for a long time or make money from a hobby (selling your baked goods, drawings, crafts).
How to develop the habit of saving?
First you need to set the amount you are aiming for (€50,000 or €500,000). Think about what you will spend your money on. It is desirable that it be something for which you will be willing to discipline yourself. As already stated, the goal is very important. Goal setting is the first thing that begins to form the habit of saving money.
Another tip is to use smart cashback services. Despite the fact that they return 1.5-5% of the purchase price (which is quite small against the background of the total spending), they still appear literally out of the blue and over time can result in a decent amount.
Oftentimes, the habit of saving is not developed because there is no motivation. But you can motivate yourself very simply by making your savings visible. For example, you can put money in a glass jar. Over time, you will see how its contents are replenished, and you will definitely want to move on and make better progress.
And the most important thing is to be patient. It will be easier to accumulate money from scratch if you are clear about your goal and follow all the advice. Remember to procrastinate and keep track of your expenses.