Smart parenting tips

How to save money when you don't have any

Parents need to plan their finances well to afford future expenses for their whole family. That is why it is advised that moms need to be wise with their money. For example, instead of spending on a grand first birthday celebration that the child won’t even remember, invest the money in mutual funds that could grow over time.

But how does one do it? You must first analyze the flow of your household expenses for three to six months. This way, you can decide where to cut costs in order to save more. Would it be more practical to bring a lunch pack to work instead of dining out> Is there a neighbor you can carpool with to the office so you can cut down on gas and reduce your carbon footprint? Can you give up your monthly gym membership and run or bike instead? Observe your lifestyle patterns and see where change is manageable.

When planning for future expenses, study all your options and determine the pros and cons before making a decision. For example, when buying a car, consider the make, your requirements, budget, and payment options. If the amount would require you to tighten your belt, decide if you are ready for such a sacrifice and commit to it. Discern which one you can manage: a brand new car that is expensive or a cheaper secondhand car that may mean more maintenance costs?

Set your eyes on your ultimate goal

Anticipated expenses such as birthday parties, school tuition, or car purchases can be categorized into short-term (one year), medium-term (two to four years), and long-term (five or more years) goals. Your short-term goals could be to establish an emergency fund that amounts to six months’ worth of your regular expenses. Purchasing a car is a medium-term goal while saving up for your retirement or getting your own house are considered long-term goals.

Goal setting may be different for each one and may not necessarily follow a standard pattern of low to high-valued goals. This depends on your means, lifestyle, and degree of determination. No matter how you prioritize your goals, it is a good exercise to create them so you have a clear direction of where you want to go.

Saving for the rainy days

There is no universal one-size-fits-all formula of saving money. The first commandment of personal finance is “pay yourself first.” This means when you receive your paycheck, set aside something for your savings fund first. Some start at five percent, others at ten percent. This can increase as your income grows. If you can afford to stash away more, even better. As for a formula to follow, it would depend on what you’re saving for, you chosen lifestyle, budget and current cash flow.

A debt (if your goal involves taking out a loan for a car or your dream house) is not necessarily bad although you need to be cautious. A good rule is to check your debt ratio – the percentage of your monthly take-home pay that goes to paying debts and monthly obligations. The lower the debt ratio, the more money you have left to save or invest. To calculate you debt ratio, get the amount needed to repay your debts each month, including rent your mortgage, and divide this by your take-home pay (your net pay after tax). Many experts recommend that no more than 15 to 20 percent of your monthly household take-home pay (excluding rent or mortgage) should be used to pay debts. And no more than 40 percent of your monthly take-home pay should go to paying all debts, including mortgage payments.

Reaping the rewards of saving

All the hard work and discipline in taking charge of your finances will pay off in the long run. Saving for the future is worth the sacrifice. Giving up little whims or looking the other way when tempting sales beckon may pinch a little, but it is all worth it once you see your savings grow. Priority-setting is a fact of life we embrace as adults. After all, our children are our first priority. And they certainly deserve a bright future. Follow these tips on how to save money for the future in order to have better and fruitful years ahead.

There are many other money saving tips that you can follow and apply in order to have a better life in the future. However, before you can apply these tips, you must decide with finality that you should implement these tips strictly and never waver from following these in order to be successful eventually. You need patience also, because you can only see the over-all benefits of saving in the long term. Saving in every opportunity that you can and exercising patience will eventually unravel a brighter future for you and your family.