Want to be financially comfortable in the future? Not very rich but have enough money to buy what you want without going into debt? There are two ways to get there. The first way is to buy lottery tickets and hope to win a large sum of money or you can focus on saving your money.
For some, saving money can be difficult. Whether it be constantly paying off debt or living expenses or impulse buying, putting away money for the future should be on the minds of everyone, especially for individuals finishing school and starting their first full-time job. Here are six tips to focus on to become a dedicated money saver.
1. Have a budget
In order to know how much you can afford to save on a monthly basis, you need a budget. A budget allows you to have idea where your money is coming from and going towards. Once you have subtracted expenses from the money that you make, you will have an amount that you can plan on putting away for the future. If you happen to have a negative sign beside the amount, unfortunately, you do not have enough to save unless you can make more money or decrease your expenses.
2. Be prepared to sacrifice
Saving money on a monthly basis does entail making choices when it comes to spending and as a result, you will be forced to make sacrifices. For example, if you wish to save $50 per month and you have been invited to go out to dinner with friends that will cost you $50, you might have to decline the offer until another month when you can afford it. Your budget will permit you to have right information to make the decision.
3. Manage your debt properly
Do you still have credit card charges to pay? If you do, consider paying your credit charges promptly with a portion of your available cash for your savings. On occasions when your debt is high, pay it off as soon as possible. Simply put, you want to avoid paying interest that will eat away from your ability to save on a monthly basis.
4. Make smarter purchases
The sources of money saved can comes from the ability to make smart purchases on a daily, monthly and yearly basis especially when it comes finding substitutes. A classic example is a bottle of water or a cup of coffee or tea. Instead of overspending for the two types of beverages at depanneurs or coffee shops, you can buy them in bulk, brew the coffee or tea at home and carry them with you. The amount that you can save on can go into your account for the future.
5. Know your saving accounts
There are a variety of saving accounts that you can take advantage of in terms of short and long term financial goals. The two types of accounts to consider are high yield saving accounts and a tax free savings account. Both accounts allow you to incur interest on your money, however; the tax free savings account gives you the power to protect the money from paying taxes on earned interest. In addition, you are only permitted to deposit a maximum of $5500 per year. It is suggested that you use a tax free savings account for the long term and park your money in high yield accounts for the short term.
6. Talk to a professional
To really have your money work for you for years to come, consider speaking to a professional in the form of a financial advisor. The advisor (either from your bank, consulting firm or an independent professional) will sit with you and recommend the best savings and investment plans based on your goals and financial situation. It is important to remember that talking to an advisor means that you are prepared to save for the long term and not for a couple of months.
Saving money is not only a skill but a mindset. From shopping at the right places to depositing in the best account, putting away money should be done early as possible to enjoy the benefits later along in life.