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Who says
saving money is easy?
Trying to balance work and home is a challenge in itself. Will you still have a clear mind to think about ways to save money when you barely have time to get a good night’s sleep? Of course, you do.
That’s if you really want to wake up one day with a fat bank account, all
because you cut on your expenses and stashed the money you have saved from the
unnecessary expenses.
Nothing is impossible if you have the will to do it. Regardless of what you want to save for, you can follow these five smart ways to save money to fund your savings goal.
1. Start Young
Saving
while you are young is the guaranteed and smart way to make sure that you’ll
end up with the amount of money you target to have. At age 25, if you start
saving $405 every month and your savings earn a 7% return over time, by the
time you are 65, you’ll be richer by $1 million. On the contrary, if you start
saving at age 30, you will have to set aside $585 every month to secure $1
million by your 65th birthday.
As many
financial advisers would tell you, there is tremendous power in starting to
save while you’re young. You’ll have the opportunity to earn even more because
of compounding interests. So, maybe you’re not aiming for a million dollar
savings at age 65, but whatever it is you aim to save after a certain period,
you can only have if you allocate a certain amount from the money you make. The
easiest way to do this is to arrange an automatic deduction of the amount you
want to set aside from your paycheck and keep it in an account you cannot touch
until the desired maturity date.
2. Don’t Overspend
Earn more or spend less. If you are a spender, the only way you can save money is to find additional source of money. You may have to take extra work so that the money you make from the extra work will correspond to your savings.
On the other hand, you can choose to spend less. It’s not uncommon to discover millionaires in Australia living in modest homes with none of the fancy cars many wealthy people keep in their carport or garage. Learn the habit of cutting down on expenses and not living on extravagance, and save at least 10% of your income.
3. Invest
Say you
save money every month, and whatever amount you have saved, you stash in a
savings account. That will not give you $1 million at the end of your savings
goal. If you want to build long-term wealth, you should invest the saved money
in stocks. When your investment reaches $1 million mark, you’ll find out that
only half of it came from your savings, and the rest will have come from
dividends, interests earned, capital gains and other returns, depending on the
investment you put your money into.
4. Debt Management
If you
have outstanding debt, e.g., credit card debt, you should pay and settle the
credit card debt as quickly as you can in order to cut your losses on the
interests credit card provider is charging you on the credit card balance. When
you have settled all your debts, then you can start saving.
5. Commit Yourself To Saving
When you
have developed the habit of saving money, it will not harm if you do it for the
rest of your life. This will ensure that hard times will never be hard times
because you have extra funds to support you and your needs. Imagine yourself
out of job, or facing a big medical emergency. Without savings, you might end
up relying on government aid just to survive. But if you have stashed enough
money, you will not have to worry about waking up without a job or in a
hospital.
Learn how
to live within your means and discount the thought of good times or luxury
items. It is better to be safe in having extra funds than be in debt for the
rest of your life. Always keep in mind that when tempted by that latest gadget,
flashy bag, glimmering jewelry, or speedy sports car; you’d rather secure your
future than spend all your earnings. Nobody wants to work until their 60’s or
70’s.
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