How to save money more effectively?

 

If you are here then most probably you are the one who is well aware of How Important Saving Money Is? But you are struggling with saving money more effectively.

 

One thing that needs to be kept in mind that saving money is more of a psychological thing than the matter of the amount of money that you are earning. And if you want to save money more effectively, you must need to know the psychological factors related to that.

So how can saving money be done in a more effectively? See I know your need. So without wasting much time let's just dive in and know How effective saving is done?

 

Having definite goals:

I knew a person called Ankit, who is a college student and lives at a college hostel. Every month his parents used to send him a fixed amount of money and by the end of the month, he spends all the money. Again, the next month he receives money from his parents and spends it by the end of the month.

 

This cycle of receiving and spending money continued until the day when Ankit desired to get a new phone. He decided to save a particular amount of money each month. Within a few months, he successfully saved enough money to get a new phone. Thereafter, Ankit again started spending all the money he gets from his parents.

This incident helped me to understand that saving money is more of a psychological thing. If you make up your mind to do a certain thing then you can do it. And having a goal will help you a lot.

 

So, the first thing you need to do is to find a goal that motivates you to save money.

Having a proper budget:

One common mistake, due to which people struggle to achieve their savings goal is the lack of budgeting and planning their expenses. Common psychology is that if you have something in front of you it will have more impact on you as compared to that in your mind.

 

Simply saying that writing down a particular thing will keep you more focused. Most probably you too have observed this fact.

Don't tell me that you haven't observed it yet. Let me remind you. Remember the last time when you had chalked out your whole day plan. That day was more productive than your common usual day when you just plan in your mind.

 

This applies to saving money too. People with a proper plan of expenses tend to spend much less as compared to when they hadn't properly planned their expenses. So, you must need to have a proper plan about how you are going to utilize your hard-earned money.

Saving Money in Long Term

• Living Bad Debt Free: One thing that takes away a huge chunk of your income is Bad Debt. Bad Debt means the kind of debt that does not add any value to your wealth instead deteriorates your wealth. Bad debt takes money out of your pocket instead of putting more money in your pocket.
• Making a proper budget and planning your expenses very well: This is one of the most basic things that need to be done by every individual. Remember allotting money towards different expenses and tallying it with the actual expenses that were made will have a great psychological impact on the effectiveness of saving money.
• Use the 50/20/30 rule. This rule states that 50% of your income is for essential things like food, house, etc. 20% of your income for savings, and 30% of your income for non-essential goods like entertainment, etc.
• Savings comes before Spending. This means that the first thing that you must do with your income is saving and later with the remaining money, expenses are to be planned.
• Track your spending. This will help you to know that what were the expenses that were made useless things. This will also help you to see how your various small spending add up to huge sums of money.
• Use a 30-day thinking period. Whenever you are thinking to get a nice and expensive product try to delay it for the next 30 days. You can call this period a thinking period. In this period, you should analyse that "Do you need that product?" If still after 30 days, you think that you need that product then you should get it.
• Proper maintenance of the things you own: Many people try to save money on the maintenance of houses, cars, etc. [some even try to avoid maintenance at all]. This is insane and in the long term, you will be going to pay more if you are not maintaining your things properly.
• Investing in quality products: Investing in good quality products leads to greater savings in long term.
• Creating a long-term saving goal: This is the second time I am repeating this in this article itself 'Have a proper goal for saving'. Your long-term goal may be to save money for a bigger house or anything that motivates you to save money.

Saving money in Short Term:

• Planning your Meal: Planning your weekly diet/food can be very helpful regarding the matter of health as well as saving more money more effectively. Meal planning is one of the easiest ways to save money, says Kalpana Fitzpatrick, the founder of MummyMoneyMatters.com
• Planning your Groceries.

• Cancelling your recurring payments: Automation in everything is not that good. At least not for paying prepaid recurring bills. It may lead you to pay for the services that you are not even using that month.
• Using 24-hour rule: This rule is similar to that of 30 days rule and can be applied for less expensive things.
• Taking spending holidays: You may try to take holidays from spending for a day or two.
• Planning your big spending: You should plan purchases during sales time. One like BigBIllionDays in India.
• Think twice before sales: Always remember that no sale is going to cost you less if you decide not to buy that product.

• Calculating cost in terms of Hours: Before any purchase to be done always calculate the cost of the product in terms of hours required to earn the equivalent amount of money.
• Avoiding Stress Spending: Many times, products are sold to you by creating stress. You might have seen tags like "limited period offer" or "only a few left in stock" etc. etc. These things are just a kind of marketing to create a sense of urgency in your mind.

Some ideas to save more money:

• You should try to negotiate each time.
• Try to cut down entertainment expenses.
• Try to cut down Power Bills.
• Try no shopping day.
• Use public transports.
• Cancelling Gym memberships if you do not need that.
• Keeping your car/bike tyres properly inflated. You can save up to 3% on fuel expenses if your tyre remains properly inflated.
• Make instant purchases harder by deleting your card details from shopping websites.
• Try to shop groceries online and avoid going to the store. At the store, you might end up buying things that you have not even planned for.
• You can try rounding off your expenses to the next hundreds and keep the extra money as savings. This way there will be no extra load you have to take and saving will also be done easily.

Hope this article will help you in saving money more effectively. Thanks for reading.

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