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Saving money is one of those things much easier said than done. Everyone knows that it is sensible to save in the long term, but many still have difficulty doing so. Saving involves more than simply spending less money, although the latter can be very difficult in itself. People who know how to save should also know how to spend the money they have besides how to maximize their income. If you want to know how to set realistic goals, keep track of your expenses and get the most long-term benefit for your money, read this article.


1. First, PAY.


The easiest way to save money instead of spending it is to make sure you never have the opportunity to spend it in the first instance. Depositing part of your salary directly into a savings account or retirement account will relieve the stress and boredom of the process of deciding how much money to save and how much to use for your monthly expenses. Basically, you will be saving automatically and you will be able to use the money that you keep each month for your various personal expenses. Over time, even depositing a small amount of your salary into your savings account can accrue benefits (especially when you accrue interest on the account), so start as soon as possible.

If you want to set up an automatic deposit, talk to the payroll clerks at your job (or, with the independent payroll service, in case your employer uses it). If you can provide account information for a savings account other than your basic checking account, you should usually establish a direct deposit scheme with no problems.

If for some reason you can not establish an automatic deposit for each salary (eg, in case you have an independent job or receive a salary mostly in cash), determine a specific amount of money that you can deposit monthly manually a savings account and stick to this goal.

2. Avoid unnecessary debt.

Some debts are inevitable. For example, only very wealthy people have sufficient means to buy a house in a single payment, while millions of people do so by means of gradually paying loans. However, if you can avoid debts, do it. Paying a sum of money in advance will always be cheaper in the long term than paying an equivalent loan whose interest over time.

However, a loan can also be a financial relief try to pay as much down payment as you can. The higher the amount you cover the purchase in advance, the faster you can pay off the loan and the lower the interest will be.

Although the economic situation of all people is different, most banks recommend that debt payments should be approximately 10% of your net income, although any amount less than 20% is considered viable. 36% is considered the “maximum limit” for a reasonable debt.

3. Set reasonable savings goals

It is much easier to save if you know you have a goal. Set savings goals that are within your reach in order to motivate you to make difficult economic decisions that are necessary to save responsibly. In the case of serious goals such as buying a house or retirement, you may need years or decades to reach them. In these cases, it is important that you monitor your progress regularly. Just by taking a step back and looking at the general picture of things, you can have an idea of how far you have come and how far you have to go.

Big goals, like retirement goals, take a lot of time. In the time necessary to achieve them, financial markets are likely to be different from those of today.

You may need to take some time figuring out future market predictions before setting a goal. For example, if you are in your years where your monetary income is higher, most financial commentators say that you will need approximately 60 to 84% of your current annual income to maintain your lifestyle in each year of retirement.


4. Set a deadline for your goals

Setting yourself ambitious (but reasonable) deadlines to reach your goals can be a great motivation. For example, suppose you set the goal of having a house after 2 years. In this case, you will have to inform yourself of the average price of the houses in the area where you would like to live and start saving for the down payment of your new house (as a general rule, the initial installments must not be less than 20% of the total price of the property).

Therefore, in our example, if the houses in the area that you are interested in cost approximately $ 300,000, you will have to save at least 300,000 × 20% = $ 60,000 within 2 years. Depending on how much you win, this goal could be feasible or not.

Deadlines are especially important for short-term fundamental goals. For example, if it is necessary to replace the transmission of your car, but you can not buy a new one, you should save the money for the spare part as soon as possible to make sure you do not have a way to go to work. An ambitious but reasonable deadline may help you achieve this goal.

5. Make a budget.


It is easy to set ambitious savings goals, but if you do not have any method to track your expenses, it will be difficult for you to achieve them. To keep track of your financial progress, make a budget of your financial income at the beginning of each month. Assigning a specific part of your income for all your important expenses can help you make sure you do not waste money, especially if you really divide each salary according to your budget as soon as you receive it.

For example, if you receive a monthly salary of ₱3,000, your budget may be as follows:

Housing or public services: ₱1,000

Student loans:₱300

Feeding: ₱500

internet: ₱70

fuel: ₱150

Savings: ₱500

miscellaneous expenses: ₱200

luxuries: ₱280

6. Keep track of your expenses

For anyone who wants to save money, it is essential to keep a tight budget, but if you do not want to keep track of your expenses, it may be difficult to reach your goals. Keeping a paper record of your spending on various types of things a month can help you identify “problem” areas and adjust your spending habits according to your budget. However, to keep track of your expenses, you must pay attention to the details. While everyone should record your important expenses, such as household expenses and debt payments, the amount of care you spend on minor expenses usually increases depending on the severity of your financial situation.

It may be useful to have a small notebook at all times. Get used to recording everything you spend and save on your receipts (especially in important purchases). Every time you can, enter your expenses in a larger notebook or in a spreadsheet program to have long-term records.

Keep in mind that currently there are many applications that can be downloaded to the cell phone, which can help you keep track of your expenses (some are free).

If you have serious problems with expenses, do not be afraid to save every possible receipt. At the end of the month, divide your receipts by categories and add them all. You might be surprised at how much money you spend on purchases that are not essential.

7. Verify all your payments

Every time you buy something in person, claim the receipt, and always print a copy of all the online purchases you make. Make sure you do not overspend on things you do not want; You will be surprised at how often that happens.

Suppose you are in a bar with your friends and one of them orders margaritas for the whole group. Make sure those drinks do not end up in your account. If you expect favors like this to return in the future, you will end up with a financial hole, which may be too deep.

Do not divide the account just for convenience. If your meal costs 1/3 of your friends’, avoid paying half the bill.

Consider downloading a phone application that helps you calculate tips more accurately.

8. Start saving as soon as possible.

 Money collected in savings accounts usually accumulates interest at a certain percentage rate. The more money you spend on them, the more interest you will accumulate. Therefore, you should start saving as soon as possible. Even if you can only separate a small amount for your savings every month between your 20 and 30 years, do it. The relatively small amounts of money that remain in the accounts that generate interest for long periods, in the long run, can increase several times their initial value.

9. Do not be discouraged

If you have problems saving, you might feel fear easily. Your situation may seem desperate and you might even think that it is almost impossible to save the money necessary to achieve your goals. However, no matter how little you start, it is always possible to start saving. The sooner you start, the closer you will be to finding yourself on the road to financial security. If your financial situation discourages you, consider talking to a financial advisory service. These agencies, which usually work for free or at a very low price, can help you start the savings process in order to reach your financial goals.

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