It’s been a while since I’ve shared a personal finance post with you guys. I think I’ve kept you waiting long enough. If you’re new here, welcome!
I’m happy you’ve joined us, stick around and read a few related posts.
Personal finance is a cornerstone topic on this blog. As a result, the topic of saving cannot be avoided. Saving money is an integral part of financial wellness and is often the first step anyone takes. I know you’ve probably heard at some point or another that it’s not about how much you earn it’s about how much you save. As cliché as it might sound it’s true.
For as long as I’ve known myself to understand the value of money I’ve been saving it. The habit grew as I aged and today not only do I save but I now employ investment strategies to allow my savings to earn money on my behalf and so can you.
Back to business
For many of us, saving is a habit that just hasn’t stuck yet. There’s always an ‘emergency’ or activity that forces you to spend your last and saving can feel like a never-ending rat race. Or for some saving is never even a thought. “Who needs to save when you don’t even know how long you’ll be around?” To that, I’d say that’s exactly why you should save so you’re prepared for any eventuality. Therefore whatever direction life turns you’ll have finances to cushion the blow.
Today, I’m here to tell help those who would love to save but don’t think they have enough money to. I’ll be sharing my top 6 tips you can use to save from any income.
Create a detailed budget
Your budget needs to be specific to you, so be honest about your spending habits. An effective budget accounts for both income and expenses. That means the money you earn minus your bills and other needs. Once that’s down take a look at what’s left. If there’s no money left, it’s time to revisit your expenses to see what can be reduced. Maybe take $1000 dollars off your food bill and another $1000 of clothing. If you’re looking for more affordable clothing options you can check out some of Jamaica’s thrift stores.
For an especially tight budget, I suggest saving at least $2000JMD per month and trying to find ways you can earn additional income. In the meantime, you’ll develop the habit of saving and financial discipline.
All other budgets should employ a minimum saving of 10% of your income and investing another 10%.
Keep everything separate
Make all savings and investment transfers at the beginning of the month. Avoid the temptation of spending all your money by completing your budget as soon as your income is deposited to your bank account. Create separate accounts for money with different purposes. You should have at the very least 3 accounts; regular savings, investment, and an emergency fund.
In the early phase when developing discipline it’s especially important to separate your income. The regular savings account is where you’d receive your pay. Therefore you’ll need to create another account to house the funds you’ll actually be saving, that’s where the emergency fund comes in. The emergency fund while adequately named can also be used to save for short term goals. On the other hand, long terms goals can be saved in an investment account where your money can work for you and it’s usually a pain to access it before the time.
Lastly, your regular savings account will be what’s used to disperse bill payment or if you’d like to pay bills using a credit card the regular savings will be used to reimburse your credit card. Typically, what’s left in the regular savings account will be for transportation, food and other self-care expenses.
Spend wisely/Don’t be afraid to say no
I’ll be honest if you’re new to saving it’ll be an adjustment. If you have a fear of missing out it’ll get worse before it gets better because this tip is all about saying no to some of the friendly invitations. Now that you’re saving you might not be able to make it to every event and that’s ok. Practice saying no so you can say yes to achieving your goals sooner. Stick to the decision to follow your budget despite the peer pressure. It will be worth it.
You’ll also have to say goodbye to the adhoc, online shopping sprees. Close your eyes to some of those sales. Not only will you need to say no to your friends but you’ll need to say no to yourself too. Say no and keep your money tucked away.
Related: How To Dress Your Best For Less
Set short term goals and long term goals.
Goals help me remain focussed. Every account I open with a bank has its own purpose. Incorporate a few goals into your budget and stick with it. For example, I started my investment account with SSL Jamaica because I wanted to save and earn money to buy a car and that I did. I gave myself a year to achieve the goal and it worked. Similarly, I suggest setting small goals and larger ones and set realistic timelines.
At the start of the year outline your financial goals. Are you continuing to save for a house? What’s your timeline to buy the house? 5 years? If yes, make it your goal to invest money in a trusted brokerage for the coming year to see more return on investment. As a smaller goal, if you need a new household appliance or want to complete a short developmental course decide at the beginning of the year how much money you’ll need to save to make that happen.
With these goals in mind, you’re more likely to want to save and more likely to achieve them if you stick with the monthly budget.
You can set as many or as few goals as you’d like but be realistic.
Sell things you no longer need
Before graduating high-school I had sold a number of my books to parents who needed books for their kids at a fraction of the original cost. That summer I made enough money to buy my beauty essentials and have some money saved. As an adult selling items, you have no use for can be a stream of income you can delegate to become savings or to pay your debt.
Also, practice not buying things you don’t need as well.
Related: How To Stick To Your Budget
Find out ways you can reduce your debt
Have a lawyer friend? Don’t be scared. Ask them how you can safely delay payment if you’re in a bind. Have them look over your purchase agreement if you used hire purchase and advise you how best to move forward. Call your creditors to see how best you can work out a payment plan and a reduction in the interest rate. Turn your hobby into additional income.
Once your debt is reduced you’ll have a greater opportunity to allocate money to save in your budget.
If you’re not in much debt that’s great! Maintain that by practicing the earlier tips. Don’t incur unnecessary debt for frivolous reasons. According to financiallysmartadvice.com the only types of debt you might need to get into are the ones that provide future monetary gain. For example, loans for a home, car, education or other investment. Otherwise, stay clear of debt until you are financially disciplined.
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