This month I stared reading a book about financial planning because that is my dream career. In the near future I will be rolling out a finance coach service for people who want to take their finances to the next level. So enough of my shameless business plug but I’m going somewhere with this all.
In the book it talked of how money is around us and controls our lives from birth to death. It cost money to pay the hospital, to raise a child, to go to school, enjoy life and will cost to bury us. You would think that with money being a large part of our lifestyle we would understand it more and yet the average person does not. Think about how much you know about air. You probably know you need it to survive, there is a lot of air on earth and some may know exactly what it consists of. But truly, the average person doesn’t know much about this gas that we depend on for our existence.
I go through all this just to encourage you to open your mind to new knowledge. No matter how trivial or complicated the subject, it’s imperative we all learn more about a large aspect of our life. Whether you think you heard it before go through once more and more importantly take action with what you learn. Now here are five ways to save money more effectively.
Interestingly enough this is a no brainer however it tends to be a common issue for people who have trouble saving. When I analyze someone’s spending, there are several expenses that can be dropped easily. Such expenses are cable, gifts, vacations, internet, coffee, car payments, subscriptions and more. Also, I have noticed that the most popular disposable expense is eating out during the day. By simply putting a stop to frivolous spending that money can be saved.
The best way to go about this is to first track how you spend. My favorite tool is Mint as it categorizes all spending and outputs trends in spending that can be used to analyze patterns. No matter how you figure your spending the next step is simply deciding on what you can give up on for spending. For some people eating out is a must have and that is perfectly fine. But you may have to live without cable or buying expensive gifts for others. Whatever you decide pick at least one category to stop spending and re-allocate that money directly to savings.
Before I met my wife my idea of saving consisted of living frugally during the month then saving what monies was left at the end. It worked well enough for me at the time. Some months would be better than others, some months maybe nothing. In hindsight I notice that it was extremely inconsistent and that’s not an ideal strategy for saving as an adult. Comes in my wife, she became our automated saving machine. It came by accident at first as we were saving for a trip for New York City and it worked so well we kept going with it. We got to the point we saved $100 from each paycheck and in no time we saved up $3000 for an emergency fund.
This was the most effective saving strategy for us and the results were superb. It starts with deciding on an amount you want to save, daily, weekly, monthly or annually. Then it comes down to a matter of figuring how much you need to save to accomplish the goal. Some months will be different so it’s encouraged to save extra cash if you can one month because another month you may have an emergency to take handle. The automated saving can be done by transferring money to a saving account or automating it through direct deposit. Do your best to never touch the money and you won’t miss it as much. Another way to automate is using mobile apps that stock away your cash in minimal amounts.
Start More Streams of Income
This suggestion requires a lot of effort on your part but don’t worry, as the results will make you happy. Just as the title suggests this is about using side income to help push your savings to the next account. Ideally this is for someone who has the energy, time, dedication and focus to find another stream of income that can boost saving. Doesn’t necessarily matter if the income is just a few bucks a month because using laser focus is what will count the most.
Finding the extra income source can be rough and you will want something that fits your current lifestyle. If you don’t work nights then it will be easier to find another income. Checkout uber, the mall, pizza delivery, theme parks to just name a few employers that are always searching. Or checkout a few of my favorite past jobs here. And to reiterate this option requires a lot of energy. Please don’t kill yourself chasing the almighty dollar. If you see that you are rotting in health then automatically drop the second job and rest. Chasing money is never a good reason to sacrifice your health.
Choose Something to Save For
One of the best ways to save money is accompanied with a goal. I talk about SMART goals and this is when it comes in handy. These goals can be short term (less than 1 year) or long term (more than 1 year.) Doesn’t exactly matter the goal in my eyes but it’s probably best to make sure the goal is attainable. A few examples of goals can be:
- Saving $7,500 for a down payment on a home before 2018
- Saving $3,400 to go out of the country on a trip during the summer of 2018
- Spending no more than $1,700 on a Rolex watch
The end goal should compliment your financial goals. Check on your finance checklist to confirm that your main priorities have been taken care of. Breaking down the figures should only require a simple calculator but just in case here is a calculator to use as well. If you plan on saving for a children’s education click here for a suggestions on the accounts to help save the money in.
Power of Laser Focus
I saved the best for last and this tip can work well with any other option above. The power of focus can accomplish tasks in a short period. The more focus you are on the goal the quicker it’s completed and the quality is higher. When you start saving for a goal it’s a simple matter of just that one goal. Pretend as if no other goals exist until that one goal is completed. And yes this tip is for people who can prioritize well and aren’t easily distracted. Write down this proverb to help you stay focused, “A man who chases two rabbits catches neither.”
As always I hope this helps you save money faster and more effectively. If you have any tips you found extremely useful please add it in the comments. Also, don’t forget to subscribe!
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