Saving up is not easy. I knew some people from my teenage years, who always managed to have some money around when in need; while I was constantly in a near-broke situation. Not that their income was higher than me, we were similar in that fashion. We were all students in a public school and none of us had a rich family. Yet, some of my friends always managed to buy the latest game consoles for example. Later I figured they naturally knew how to save money; they were the “savers”.
So, there are “savers” and I’m not one of them. So, how to save money?
Hey! Don’t worry. Although, in my opinion and life experience, being a natural saver means being one huge step ahead in life (honestly), you may not be a lost case entirely. No, no seriously. It’s possible to save up, just not without help and guidance. Latest years of my life, I pretty much learned how to save money. I do have some actual money sitting around. So I decided to share my experience. So what to do next?
1. Gather data. Data is good. Data is who you are.
You may have a monthly income, which barely makes the end of the month (or week for that matter). You want to know why? Correct, gather data! Just take one or two income cycles (weeks, months, etc.) to write down every cent you spend. Do not start saving just yet, you need to make a strategy, so you can see what’s going on. If you have a partner who shares your income, ask them to participate. Just never forget to record each and every expenditure, as you never know what piles up to slyly leech off of your income. Use your smartphone which you keep with you all the time. If you don’t have a smartphone, you should have been rich already, what are you doing here?! (OMG with all that free time and productivity. Just write a book or something).
2. Make the data readable.
So at the end of the month, you have a huge list of every piece of everything you have spent money on. This should be of little to no help as it is. You need to categorize the expenses like “entertainment”, “eating out”, “grocery”, etc. This is very important to analyze your spending habits and make a decent strategy on how to save money.
3. Separate arbitrary from mandatory.
Obviously, you have some inevitable expenses. Just add them up and put them aside. You have not much to do for them, you’ll just pay and forget (like the rent for example). Rest, you can manage.
4. Plan ahead, how much you can live without.
Eating out may be a big part of your life, but think again. See how much you could have saved if
you just cut it a little and cook at home. How many games did you buy? Did you beat them all? Just asking :). The key here is, you cannot EVER cut these expenses on the go. You’ll always be easily tempted to buy another game if you fail to see the big picture. So you have to plan how much you should spend on what, in advance. This will give you the amount you can save every month, on an excel page of course. Now comes the most important part…
5. Save first, think later!
Now that you know how much to save up every month, guess what you should do next; save it! Just put the amount you planned away to a savings account, or wherever you planned to keep it. Just forget it exists. Make your mandatory payments, and live with the money left. You’ll be surprised to see how you will be able to manage. Trust me, being in a strategy gives you unparalleled motivation. Of course, there may be some unplanned out-of-hand situations, can’t really say anything for them. Just be careful, keep yourself healthy and quit smoking!