Saving is an integral part of financial planning. In fact, no financial planning can never be complete without attaching considerable importance to savings. So, when you draw up your financial plan, you will have to make sure that you chalk out ways in which you can save money. You also need to understand that saving a lot of money at ago may not be possible for you but saving little amounts can actually help you to save big money in the long run.
Spend less than you earn
This is the basic motto of personal finance. As a deserving person, you should understand that spending less than what you earn will help you achieve the ability to save money. No matter how much you earn, you must live within your means to lead a rational life. It is said that the more you earn, the more the responsibilities. It is common sense that if you earn more you take more responsibility. This is not always a good idea as overheads multiply as well. Once you start spending more money than you earn, start thinking about debt and buying things on debt. Debt is a kind of obsession, once you get used to it, it’s hard to get out of the debt trap. So, stay away from credit cards with aim of having unnecessary spending.
The basic principle of saving is; understanding the relationship between your income and expenditure. Ideally, the amount that you earn should always be higher than the amount that you spend every month. The difference between your income and your expenditure is what is known as savings. There are a lot of people who find it difficult to maintain this difference and at times end of spending more than what they have earned in a month. However, small savings will help you to save a considerable amount eventually so adopt small savings measures as frequently as possible.
It has been seen that most people end up spending more when they make most of their purchases using credit cards instead of by paying cash. When you have a credit card at your disposal, your urge for the spend increases significantly. Using a credit card means that you are not very conscious about the money that you are actually spending and this results in you ending up spending more. The interest accumulated on the credit cards is also a considerable expense. So, you must try to avoid using your credit card as much as possible and use cash to make the purchase. It has also been seen that when people purchase credit cards they end up buying things they might not actually need and ended up choking up with bills that they couldn’t afford to pay off in time. At times like these, turning to money lender might be one of the best alternatives at the moment.
Save as much as possible on your utility bills. The saving you make on each of your utility bills might seem negligible but when you put together these small amounts you will be amazed to see the amount that you actually save. Making small changes in your buying behavior will help you to save quite some money.
There are certain assumptions that investors make, that allow some of their advisors to exploit them. With these assumptions, it is difficult for them to see the red flags. There are certain things that the financial planner would never do. You need to know them so that you can spot a fraud or an inexperienced advisor.
Relying on Recommendations
Most people will find admire and seek financial advice form the rich. Most of these recommendations and advice are given by well-off family members, friends or someone who is tremendously rich. These are not always the best people to rely on for expert saving advice.
According to some research in Singapore, most people fail to meet their financial savings goal due to the simulation of some rich person’s lifestyle. Sometimes, friends and family do not know how to limit their spending spree since they earn a lot of money. For example, someone in the family or friend may win a lottery or were born in a wealthy family thus don’t have an idea of how to achieve a savings goal and the challenges one has to pass to achieve the much through savings.
You need to first check the source of the wealth of the person who claims to be the extremely rich. Do your research and don’t just follow blindly. You can find out a lot of information through interacting with them and finding out their source of wealth to see whether you can borrow a leaf. Also, ask if them whether they can give you derailing factors that they faced while pursuing their financial goal if they worked hard for it.
Allowing to be Pressured
Another mistake that people make when trying to find save up is to allow the rich peoples’ spending practice get into their heads and be pressured to live like them. This is usually a sign that they are getting carried away by lavish spending and forgetting their financial goal. The pressure may be in the form of lavish spending or exorbitant lifestyles one would admire. Pressure may also be more subtle, in the form of fashion and investments.
What should keep you focused?
Having a budget eventually will allow you to see where your hard earned money goes. It will give you a perception where you can cut costs and where the issue areas are. By carrying this out, you will be able to make the necessary adjustments and monitor your expenses. And you will be surprised that you actually have some money as savings or even more for investments.
Spending more than you earn can result in borrowings. These borrowings come either from loans or from credit cards that include interests. Once done over time, you find out that he is already in insurmountable debt. So what’s the good thing to do? It is to not spend as much than what you make. In this way, one becomes debt-free and may plan a much better future for himself and his family. Ensure that you set aside money for a certain goal. Open an account that offers a higher interest rate which limits the number of withdrawals to the account. In this way, you will no longer have an interest nor try to withdraw money from such account.