Budgeting your money each month might not be something that you look forward to, but it is one of the most important things you can do to maintain financial independence. The more you know about the amount of money that you have coming into your bank accounts each month, and the amount of cash that you have going out, the easier it is to avoid over-spending and getting yourself into problems.
The good news is that if you dread the idea of saving, there are some quick steps you can take to make your budgeting experience more sleek and streamlined. Today, we’ve put together a list of basic saving rules that you can use every day to improve your chances of effective budgeting.
1. Constantly Review Your Accounts
Most people wait until they get their monthly statement to look at how much money they’ve been spending. There are even people out there that will neglect to look at their statements at all until they get a letter from the bank telling them that they’re overdrawn.
The easiest way to keep track of your money is to make sure that you’re constantly reviewing your accounts. Start with a basic idea of your budget at the beginning of the month, then review your cash at the end of each day using your banking app or online account. This will help you to see whether you’re still making progress to your goals. It should also help you to bounce back quickly if you notice any large deductions that you have to manage.
2. Pay Your Savings First
It’s easy to brush savings off as something that you can come back to when you’re earning more money. However, the truth is that everyone needs savings to live with financial independence. Your savings don’t just help you to reach your long-term goals. That extra money is also how you protect yourself if something goes wrong in your life.
Find out how much money you have left over after paying all your bills, then focus on putting at least a small portion of your wages aside each month. The first step to good savings is having an emergency fund that covers a few months of your wages. Once you have that, you can start dedicating your cash to anything you want, like a new home or a vacation.
3. Calculate Purchases in Time
One of the main reasons why it’s so easy to spend money these days is that we’re starting to lose track of the actual value of cash. When it’s so easy to click a button and make a purchase or swipe a card and get whatever you want, it’s difficult to see the value in what we earn. However, the next time you’re thinking of taking out a loan for a big purchase or using up your savings, think about how much you’re spending in terms of the number of hours you’ll need to work to pay it back.
Looking at purchases in the time you spend at work, rather than just dollars and cents will help you to get a real feel for what you’re actually spending. If a fancy meal costs 2 weeks at work, you might think twice about eating out.
4. Have Fun with Saving
Usually, saving money isn’t a lot of fun. However, you can easily have a good time with your cash if you know how to play the game. For instance, instead of just telling yourself that you have to save as much money as you can as often as possible, challenge yourself to save a specific amount of money every time you go shopping, then reward yourself for achieving your goals.
For instance, if you save $50 in total from your trips to the grocery store by buying non-brand items, at the end of the month you can treat yourself to something worth $10. This still gives you $40 to save and helps you to feel better about using your money.
5. Get Rid of What You Don’t Need
Finally, there’s more to getting rid of what you don’t need in life than selling the old items you have laying around the house. Don’t forget to regularly go through your bank statements and cancel any subscriptions that you’re not using.
It’s also a good idea to see whether you can switch from one vendor to another if you’re spending too much for the subscriptions or monthly payments that you want to keep. You’d be surprised how much you can save just by switching.