A Practical Guide To Saving Money

A Practical Guide To Saving Money

15-03-2021 in Finance

Saving is the activity of putting aside a part of one’s income for later use while Savings is one’s assets in the form of cash. In this article we'll be discussing the best ways to start saving money with tips and money savings apps.

How to start saving money?

The foremost step to take is to eliminate and avoid debts. There's no improving your finances, so long as debt exists. All debts must be settled, you need to pay off debts with high interest rates, anything from 8 to 10%. You can take your time or spread the payment of debts with low interest rates, because when paying off debts, there might not be money to save.

Saving money: 6 tips:

Track your expenses and create a budget: A practical step to take while saving money is to have a record of your expenses. Examine your spending habits for a month or two; get the statistics of what you must spend your money on every month or week. Then draw up a budget of how you plan to spend, save or invest every single pound from your next earning.

Determine the percentage of the income that would go to the savings.

At least 10-20% of your earnings should be saved; take into consideration your expenses and other miscellaneous. The thumb rule of saving is that you pay yourself first before paying for expenses. Save at least 2 to 6 months of living and feeding expenses in a high interest savings account.

Determine where the money should go:

A savings account or one of those apps that automatically transfer a certain percentage of money from your checking account to savings should be the next thing that comes to mind. You can use an account that can’t be accessed easily.

Reduce your expenses:

cut out unnecessary spending. Your zeal for saving should be stronger than your unnecessary wants. One of the best saving money tips to help not just you, but your friends also, is to hold a money saving challenge.

Have a realistic goal:

your saving goal should also be at the back of your mind. It’s easier to start from a smaller goal, and the satisfaction from achieving the small goal would encourage saving for a bigger goal.

Review monthly:

review your budget and savings plan monthly to ensure that you have been following through. Give room for changes because each month is different from the next, and also in case of emergency needs.

What you need to know about saving money

With just the tips for saving money you will definitely succeed in your goal. Here are some other things that you should keep in mind.

The amount you should save

On average, 10 - 20% of one’s income or salary should be kept aside for saving. Read our reviews on saving with Fidelity ISA and WorldRemit.

The reason why you're saving money

There are different reasons for saving. Saving and investment grant one financial freedom and independence. It caters to emergency needs and helps to achieve set goals.

The 30-day rule for saving

This rule helps to determine what expenses are important or whether that money should be saved. If there’s a particular thing you want to buy or feel the need to get, keep it in your savings for 30 days. If at the end of that period you still want to buy it, feel free to buy it, but if you do not see the need to get it anymore, save that money. Want to know more about saving and personal finance? Read this article about the basics of personal finance.

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