On the slogan “saving money” most people have in mind denying themselves pleasures, or putting aside all the money that is not spent on everyday things.
This is a solution of sorts, but there are simpler and, above all, more effective ways to make sure that not all the money “leaks through your fingers” and some of it stays in your wallet. In this case, which habits are useful?
Several aspects can be distinguished that form the basis of financial management. It is certainly the maximization of profits. There is no shortage of opinions that the best way to save is not to set aside meticulously from what is left, but first of all to find new sources of income. This is true at every level – those in the lower, middle and upper classes. Everyone has their own opportunities to earn more.
The next point is to monitor income. It’s a good idea to write out your regular expenses on a piece of paper and estimate how much you incur in costs for standard purchases. This includes, for example, food, bills, subscriptions to your favorite streaming portals or clothes.
With the help of income monitoring, you can determine how much of your monthly paycheck should be set aside just for these things. With such notes, you can plan your expenses and determine whether the money you earn will be enough to pay all your dues.
The last point, important in the context of financial management, is the creation of scenarios. By thinking every month or every year about exactly what the money will be spent on and what costs will have to be incurred, you can outline a plan – setting goals for earnings and trying to minimize costs.
Fixed expenses include 5 things: fixed fees, out-of-pocket expenses, retirement investments, long-term savings and so-called “whims. Just determining your monthly expenses is a step to developing the right habits to help you find extra money in your personal budget.
The next step is to determine how much money will be allocated to each expense. Proportions don’t have to be figured out and determined on your own. With help comes a diagram showing the costs that each person incurs during the month. It was created by Richard Jenkins. The data contained in it are as follows:
By developing the habit of setting aside 10% from your monthly salary, you can easily provide yourself with an extra cash injection. Using the diagram, it’s also a good idea to immediately transfer money to separate accounts: savings, for whims, or to set up periodic payments to the entity’s bank account, to which you pay energy fees, among other things.
In this way, you will set aside a specific amount at the beginning of the month, and without denying yourself the pleasure of small expenditures on whims, clothes or whatever you want. The only important thing is to be systematic and treat saving as paying out money to yourself. With the amount you set aside, you will be able to go on vacation, buy a new car or make useful learning supplies for your child!
main photo: unsplash.com/Sasun Bughdaryan