Everyone dreams of having a savings account full of cash, that they can use on whatever it is that their heart desires. The only problem is, saving money can be quite difficult, especially when we don’t know where to start. It can be difficult to save money no matter what it’s for, but hopefully, this step-by-step guide can give you a few tips.
Write Down Your Expenses
Your first step to saving is to work out how much money it is that you spend. Ideally, you should capable of accounting for every penny; This means any little extras like coffees and snacks, as well as your bills. Separate these expenses into essentials and nonessentials. Your essentials should include your rent or mortgage, money for groceries, and any other bills. You nonessentials should include meals out, and any of those little extras mentioned above.
Create A Budget
Once you have figured out all of your expenses, you should create a budget, so that you can avoid overspending. Your budget should include how much money you are going to spend on your rent or mortgage, your groceries, and all of your bills, and see how this total measures up to your income. You can even include a category for nonessentials in your budget if you have the money for it. Visit forbes.com for help, if you are struggling with your budgeting.
Plan To Save
Another category of your budget should include your savings. Generally, 10-15% of your income each month is deemed a reasonable savings amount. If you can’t afford to put away 10%, you may want to look through your list of nonessentials and start cutting things out. You might also want to look into other ways of cutting back on expenses if your outgoings are too high, such as switching providers for things like your internet.
Decide What You’re Saving For
How much you need to save and how long you need to save depends purely on what it is that you are saving for. For example, if you’re planning to save to buy a new house, you are likely going to be saving for at least five years, before you spend any of your savings. If you are planning on using the money for a holiday, you need only save for a couple of years. However, depending on what you decide to buy, you may want to consider paying for it with a credit card, so that your money is protected by buyers insurance. Personalloan.co has information on applying for personal credit if you decide this is the right option for you.
Let Your Savings Grow
Be sure to put your 10-15% of your income into your savings account each month. You could even set up an automatic payment to go out of your regular account into your savings account each month, to make sure you don’t forget. Then you just have to keep your mitts off the money until it’s time to spend your well-earned cash.