Most people’s budget revolves around three aspects: food, housing, and transportation. It is a well-known fact that these factors almost take up two-thirds of the expenses. In addition, you will have other things like paying off debts, prioritize saving and many more. When many people try to find how to save money, they usually end up with saving few dollars here and there.
How To Save Money Effectively
Although it is good to make small savings, however, the smartest thing to do is to look for the big savings. When you focus on big savings, it would definitely save you thousands of dollars at the end of every financial year. Perhaps this would require some sacrifice but saving money takes discipline. A shocking strategic survey shows that 33 percent of American are left with nothing when they retire. This is a really pathetic situation to think about their lifestyle in their older ages.
So, planning ahead for the future is very crucial not to make yourself to become a part of that community. Before planning how to save money, in the first place you should know why it is important to save money.
Importance Of Saving Money
There are a few reasons why you need to consider savings.
Many people fail to prepare for the future. Saving for emergencies should be a top priority for every American because saving at least 500 or 1000 dollars every year will help you to meet unexpected financial challenges like
- Car maintenance and repairs
- Kids school project
- Maintenance work in your home
- Health challenges
- Paying fines for parking offences
- Emergency flying to visit your close friend or relative
Become Financially Independent
Adulting is fairly difficult. It is not a simple thing to pay credit cards, manage student loans and budget – all big things by you, without the help of your responsible dad and caring mom. It is a real intimidating process. However, a surprising figure shows that more than 40 percent of young Americans have expressed that they love being financially independent. So how they do it?
- Build a game plan to pay your loans
- Improve your credit scores
- Rent up a place that fits your budget
- Maintain a bank account of your own
- Understand the concept of health insurance plans
- Reduce money on transportation like commuting on public transits and make use of car-pooling.
Although the ability to save money is crucial, it is more important to make savings on your spending. In addition to that, you should aim to
- Reduce taxes – There are a number of ways to trim your taxes though the Congress makes changes to the tax laws
- Deposit pretax contributions into a 401k or other tax-deductible retirement account. The more you contribute, the more you reduce the gross income which is the main criteria for your tax calculation.
- Paying off debts is often advisable however don’t pay off your student loans because it can save you lot on taxes
- Sign up for automatic savings, and this will really help you reach your financial goals. If you want to become a better handling person on your money, you probably need a savings plan. When you have an automatic savings account, you will likely build the habit of spending less than you usually do. Over time, this habit will enable you to live even with smaller earnings.
- Shop smart, make use of deals and save at least a dollar on your shopping – Make budgeting on your shopping. For instance when you don’t have a budget for shopping clothes, better avoid going to the mall on Saturday. When you don’t have the option, obviously your push for overspending is certainly avoided. However, you need not to get bored or waste your day instead you can spend the lovely evening on a beach or park enjoying with your family and friends. However, whenever your shopping is mandatory because your wedding anniversary is falling the coming month, then make your shopping in a wise manner. Look for the deals around, compare prices for the best deal. If you find online prices are better than store prices, make your purchase online and save some pennies.
- Do the necessary expenses. Otherwise, it will lead to unnecessary expenses. For example, your car will require regular maintenance to function effectively. However, when you want to save money and avoid doing its maintenance, it will lead to major repairs and create a situation to spend more on repairs and maintenance.
To sum up, the best way to become a better saver is to make it part of your lifestyle. Avoid situation that pushes you to overspend. When you have plenty of cash in hand, obviously you have an intent to make some shopping. So understand your emergencies, calculate your risk and practice to live smart by managing money in the wisest way.