Tips to start saving money like a pro
Saving money like a pro isn't half the dread it seems to be. If you had an apple tree in your backyard, of course, you would not be eating apples for breakfast, lunch, and dinner or simply giving it all away. Likewise, even if money grew on trees, we wouldn’t be recklessly using it or disregarding its significance.
What’s better, unlike apples, the shelf-life of money knows no bounds. You can choose to spend, save, or invest. As exciting as spending sounds and as thrilling and wise as investing sounds, saving just lacks the flurry, right?
But interestingly, it is our savings that help set aside a corpus for you. Hence, saving money becomes an essential part of your financial planning, regardless of your income stream or financial goals.
Whether you are a student, working professional or a retired person, the art of saving money should ideally be learned by all. Here are a few tips that you can consider if you want to save money like a pro:
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Saving money like a pro
Calculate cost per use
- Whenever you buy something, you should consider how useful it would be for you. The idea is to not discourage you from buying anything fancy but to help you prioritize. Analyze the need for the product you intend buying it. For example, if you intend to buy the latest set of headphones but would only use them for a few hours during the week, you should consider whether you would be able to buy them without creating a dent in your finances.
Divide your wants into essential and non-essential categories
- When saving money like a pro, dividing your purchases into essential and non-essential categories can help you allocate your funds in a better way. If it seems difficult, then here is some rookie advice: every time you hold yourself back from spending on non-essential items, think of it as earning money for every non-essential transaction.
Say no to impulsive buying:
- Impulsive buying can be problematic and cause a dent in your finances and could simply stress you out. During the holidays, especially, brands tend to entice us with constant sales and we could be easily tempted by these and buy items that we don't really need just because it was 90% off.
- Try and say no to impulsive buying and try and spend only on your needs, especially during the holidays.
Document, track, analyze, and plan:
- Jot down every expenditure and income and the ways in which you further direct them. This will help you know your finances better. You can download an application, among a sea of apps available, and document your finances in that. It will also provide you with accurate statistics and help you analyze your spending trend which, in turn, can aid you in planning your finances better and provide impetus to saving money.
- Yes, you read it right, spend money for not spending money. However, it should, of course, be regulated. Pre-determine a rate at which you will incentivize yourself if you adhere to your own terms of saving money.
- You can choose to give yourself as much flexibility as you need, however, keep your financial goals in perspective. For instance, you can choose to incentivize yourself at 5% of your savings for the month. So, if you save more, you can treat yourself better!
There is never a better time to start saving. Whether you are a child getting a certain allowance from your parent or guardian, a college student earning a small stipend, a professional having a regular income stream or a retired person with a corpus of money, it is never too late to start saving.
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Frequently asked questions
1. How can I save money creatively?
- Inculcate small habits in your daily life in order to save money more creatively. This can include transferring all your financial bonuses and benefits directly to a savings account and cooking meals instead of ordering or going out.
2. How much should I save each month?
- Ideally, saving 20% of your gross income every month can create a big corpus in the long term. You will, however, have to be disciplined while saving. Hence, decide a reasonable proportion and save it consistently every month.
3. How can I save money more efficiently?
- In order to start saving money efficiently, firstly, get rid of your debt as that can be a hindrance to your savings. Then, make small changes to your lifestyle and dedicate a no-expense day in the week.
4. What is the 30-day rule in saving?
- The 30-day rule postulates that if you wish to buy something, then delay the purchase for 30 days. If at the end of that period, you still wish to buy it, then go ahead with it. If not, then don’t. This helps in eliminating unnecessary purchases.
5. What are the benefits of saving money?
- Saving money has huge benefits for every individual. It helps create a corpus that can be used for a dedicated purpose or for unforeseen expenses. It provides peace of mind and helps make better and prudent financial decisions.