Do you know that saving is important but you don’t know where to start? Are the methods you’ve seen on saving at home put you off? In this article we are going to teach you how to save money with proven methods.
First of all, we want to make sure you understand very well the impact that saving can have in the long term:
If you manage to save $1 a day, in 20 years you will accumulate more than $ 12,000 if you have an annual interest of 5%. It’s hard to believe, but that’s the way it is.
Now that you are aware of its importance, let’s see how you can save money step by step.
Many see it as something impossible to master; as if an external force forced you to spend all your income. Not so, and you are going to learn a way to save money that really works.
Before starting with the steps, you should consider the following:
- As much as my system can teach you, if you don’t do your part you won’t save a penny.
- If you want to save the “typical” 10% of your salary, this way of saving money will work for you, although it is designed to save much more money.
- Consistency is the key to success; Saving money every week or day is what will make a difference.
Let Us Begin!
Control Your Day-To-Day Expenses
The first step is choosing a method to control your daily expenses. We are not asking you to start saving or thinking about ways to do it; simply that you identify where you spend your money.
We know. It is very lazy to quantify each of your expenses, but this is the only way to save a relevant percentage of your money. In addition, today it is easier than ever to keep track of personal or family expenses.
Once you get used to it, you won’t want to stop. We can assure that.
How To Control Your Expenses?
Next, we are going to explain 3 ways to control your daily expenses and keep track of household savings. Choose the one you prefer:
It is the method that we use. There is a lot of variety so you can surely find one that you like. We mention the two that we recommend:
Other options already available on the market are:
→ Money Pro: It has a free and a paid version, as well as a monthly subscription to connect your bank accounts. The subscription will allow you to connect your bank accounts and synchronize everything more easily, without it you will have to enter your expenses manually.
→ Fintonic: Another widely used option although, in our opinion, it could improve in some aspects. Their business is based on sending advertising mainly for credits, something that we do not like personally. Even so, it has very good things like integrating your banks to control your expenses without lifting a finger. Today, the easiest option if you are lazy to control your expenses manually.
Prioritize Your Savings
Once you are clear about how to control your daily expenses, you can prioritize your savings.
Saving can be prioritized in many ways. We are going to explain to you the method that has allowed us to save a large amount of the money that we earn (approximately 50%).
Our way of doing it is by classifying the categories of expenses that we have defined in the following groups:
- Main Expenses: These are the expenses that form the basis of your lifestyle and are difficult to reduce in the short term (similar to fixed expenses, although it is not exactly the same). In this category there is usually the rent / mortgage, the transport that you usually use or the children’s school, among others.
- Secondary Expenses: These are expenses that, although they may be important, you have more room to reduce or eliminate them. In turn, you must divide them into:
- Recurring Secondary Expenses: Secondary expenses that are repeated over time: grocery shopping, electricity bill, other household services, restaurants (if you go often), subscriptions. These are usually monthly or annual expenses.
- Punctual Secondary Schools: Secondary expenses that occur occasionally or very infrequently: one-off purchases, gifts, trips, activities.
Classifying expenses is very personal, so these examples may not apply to you.
Merciless Recurring Side Expenses
Your number one priority will be reducing recurring ancillary expenses.
First of all, you need to find out if there are any that you can remove directly. They will be those expenses in which the value contributed is practically zero.
Some examples of expenses to eliminate can be:
- Subscription to the gym that you do not use.
- Video / music streaming services that you do not use or could centralize in one (Spotify, Netflix, HBO, etc.).
- Mobile insurance or others that are not necessary (although they sold them very well).
- Monthly subscription apps that you hardly use.
- Cleaning or ironing service that you could do yourself.
- Coffee or breakfast from the bar every morning (can’t you make it at home?).
- Tobacco (if you don’t do it for your health, do it for your pocket).
Reflect well on each of your expenses and ruthlessly eliminate those that do not contribute enough. It is not an easy process, but think that you always have time to incorporate it again (although I doubt that you will).
Another way of saving money is making more money. You might wonder “I am already working full time”. That might be right but consider other types of incomes.
Do you have an old DVD-player? Put it up on the marketplace and someone will pay $30 for it. Save that money. Same with an old car that might be sitting in your garage. Contact a cash for cars company to sell it quickly which will be added to your savings.