1. Record and limit your expenses
Try to maintain a detailed daily record of how much you spend on everything. Maintain this for one full month, then at the end of the month add in your monthly expense – school fees, utility bills, loan interests, and so on. Knowing how much you spend is the first step to a healthy financial balance. Once you have a complete list, try to cross out unnecessary spending and cut down the essential ones.
2. Spare money for emergencies
Always, always spare some cash for emergencies. You never know when you’ll need them and when you do, you’ll be grateful that you are prepared. Emergencies can come in the form of sickness, accidents, breakdowns, disasters, and so on. It is also helpful to set aside some money for some expected expenses that do not occur monthly, such as car maintenance, marriage, graduation celebration, retirement, etc.
It is always much easier to accomplish small goals that we can ‘see’ clearly instead of huge ones that seem insurmountable. Instead of a yearly goal of saving $15,000, why not set a monthly goal instead? Of equal importance is to motivate yourself by clearly stating why you want to save money. Don’t be vague and say things like “I’m saving money because it’s the right thing to do.” Instead, get yourself focused by saving money for your children’s education, for a vacation, for your own house, or other grand things.
4. Stop impulse buying
Impulse buying occurs far more often than you think, and unfortunately, it usually occurs with expensive things like luxury bags, gadgets, or fancy dinners. You are the best brake to stop yourself from this destructive habit. Always ask yourself whether the things you’re going to buy is really something you need or merely something you want. A good trick is to wait for several days before buying an item; if you still want it after waiting, then perhaps it is worth your money.
5. Open a savings account
There are several types of savings account from which you can choose according to your needs. Other than the regular savings account, there’s a high-yield savings account which gives a higher interest rate, a money market savings account which has a variable interest rate, and a certificate/deposit account which keeps your money inaccessible for a certain period, but gives a significantly higher interest. Other options include stocks, mutual funds, or government bonds and these are definitely subjected to investment risks.
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