Have you ever thought why most of us fail to save money?
Many of us have tried many ways to boost our bank account, including asking for a raise from our boss, finding multiple income streams and even buying lottery.
Despite all of these efforts, we still end up with a stagnant savings account. Here are 4 practical steps that will help you save money:
- Have a firm decision to save money. It’s important to constantly remind yourself to save money. A good advice would be to tell people that you are committed to save money this year. Your public declaration of your goal to save money will help you get motivated.
- Take an accounting of your income and expenses. Before you set your monthly budget, know where you stand. Identify monthly expenses that are avoidable and unnecessary: Is it your morning cappuccino or interest charges in your credit card? On the other side of the paper (side by side with expenses), you identify your revenue sources. Perhaps, it’s high time to look for other sources of income.
- Set a realistic budget. The basic equation is that income should exceed expenses to be able to generate your surplus. It is important that you know how much you can save a month. Look at your monthly expenses again and decide which one would most likely be eliminated. If you are still undecided on how much you can save, set a percentage of your total income. Treat that as an expense. Start on a small percentage and increase it gradually.
- Live below your means. This is classic approach to getting rich slowly. You have to cut down spending and free up much of your income. Most of us are tempted to consume. There are TV commercials who encourages spending. The retailers who sends you daily text messages offering you freebies if you buy items from them. The secret to living below your means? Have the ability to say no. It requires effort to minimize spending, but it’s achievable.
When you are able to do the steps I suggested above, I am sure that you will feel more financially secure – and definitely a happier person.