You don’t need to wait to earn more. Here’s how to start saving more money today.
In 2022, as the inflation rate heats up, 64% of Americans are living from paycheck to paycheck.
Meanwhile, last 2021, 51% of Americans had less than three months' worth of emergency savings, something that financial experts say is critical to your livelihood.
What is an Emergency Fund?
An emergency fund is a bank account with money set aside for significant, unforeseen expenses such as hospitalization, house repair, and unemployment.
How much money should one set aside in an emergency fund?
Ideally, you should have at least three months' salary set aside, but preferably more. To put it lightly, an emergency fund is your financial buffer.
In light of the status quo regarding the constant price hike of market goods and the limited improvement in the salary, you may be wondering if it is still possible to save money.
Here’s the truth: You are not financially doomed.
Despite the current situation, there are several ways to save money effectively. For some people, saving money may seem like is a distant dream that you hope to achieve when your income increases. However, in most cases, you can begin saving just by changing your fiscal behavior and increasing your financial literacy.
Here are a few guaranteed money-saving tips so you can start saving today!
1. Track your spending.
The first step in creating a budget and saving money is keeping track of your expenses. You may use whichever tool you are comfortable with, whether by using a pen and paper, a spreadsheet, or a mobile application.
List everything you spend on, such as food, gas, mortgages, and other miscellaneous expenses. Keeping track of your purchases will give you clarity on where you are spending the most and will help you clearly assess your spending habits. Keeping an expense tracker will also let you know if you have exceeded or about to exceed the budget.
2. Identify and separate your wants from your needs.
After keeping track of your spending behavior, another helpful money-saving tip is identifying your needs and wants. This step is essential in achieving your goals. Separating your needs from your desires will help you create a lifestyle where you have defined cash to spend on necessities and luxuries while saving.
3. Downgrade or cut your services and try lowering your energy bill.
One of the frugal tips you can also practice is to assess if you really need that cable upgrade or the Netflix Super HD plan. You may also turn off the lights and fan when not in use or opt to use LED lights than the regular fluorescent bulb to save energy. Not only do you help conserve energy but you also save money. That’s two birds in one shot!
4. Cut down on food deliveries.
And speaking of two birds in one shot, one of the best ways to save money is to cut spending on delivered food. So you get to increase a portion of your savings while eating healthy home-cooked meals.
Don’t know how to prepare meals yet? Learn the proper way of Grocery Shopping and Cooking here.
5. Save regularly.
The actual savings is the crucial part. Open a savings account if you don’t have one yet. Commit to a certain amount to be saved every time you receive your salary. You may also automatically debit your payroll account to transfer money to your savings account. The trick is to treat your savings as an expense. Monthly savings are usually 20% of your net income, but it will still depend on you. Whether it is 10% or even 5%, consistency is more important than the amount you save.
6. Look for insurance policies.
After completing your 3 to 12-month emergency fund, you may proceed to start an investment. One of the most crucial investments you should have is an insurance policy that covers your retirement benefits, critical illness, and death benefits with an investment plan. This way, you can also start saving for a rainy day.
Extensive financial knowledge is easier said than done. It takes a lot of research, reading, and discipline to finally achieve your financial goals.
Financial literacy goes beyond having a fat savings account and an insurance policy to protect you. You must understand other aspects that affect your personal finances, like financial policy. And you must utilize your personal finance knowledge to determine your priorities until you finally achieve your financial goals.
If you are seeking to truly get a handle on personal finance. We can help. Learn more about managing your financial planning and investing in this course.
Categories: Financial Planning and Investing