Save Your Money –Everybody would love to spend all the money they earn every month. It is a natural impulse to indulge ourselves driven as we are by the pleasure principle. Spending all the money we earn every month buying whatever we like will leave no surplus for future.
Saving for future is necessary for enjoying a stress-free retirement. If you are in the habit of living from paycheck to paycheck, it is clear that you will not be able to save anything for future. There are many reasons for saving for future. It is always good to have a sum of money for meeting unexpected expenditures.
One cannot over-emphasize the importance of saving for the future. Savings will become important when you will retire and there will no jobs to support you. It will be very late for you to realize how crucial it is to save.
Moreover, saving is not only for retirement. Even for building a house or buying a car or any expensive asset, you will have to save money. Thinking ahead is imperative for creating future otherwise it might not be possible to save.
First step to create sufficient savings is to learn the art of budgeting. Whether you are living alone or with a spouse or a live-in partner, you must get good understanding of how you spend your money. Understanding household expenses and cash flow will help you to plan how much you can save.
Automating your savings is another way to set aside fixed part of your income for monthly saving. Consider this as bills that you must pay every month. And, you must also learn to differentiate between what you need and what you want. This behavior of yours will also train your kids in management of finances.
Important Tips for Saving
Saving is not difficult once you see how important it is in your life. Having understood the crucial role it has in your life you must create milestones for engagement and gradually increasing the amount. Creating financial milestones underlines your capacity to meet them. Moreover, you can also use an online savings calculator for better management of financial goals.
Create a monthly budget
In order to meet your goals it is important that you have a monthly budget. It provides with a road map and estimate of your expenses for the month. It gives you the structure that must adhere to. Understand the importance of meeting monthly goals even if you have to cut back on expenditures.
Meeting monthly goals will be possible only when you have the commitment and realistic understanding of your monthly expenditure on things that cannot do without. It will aid you reach the goals every month every time. Clarity of mind regarding expenses and saving goals is the best way to save money for future.
Many people just talk about setting saving goals but they never get down to doing it. Planning your saving goals is important but if you don’t execute your goals it is useless. There has to be determination for creating the future you want through meeting your monthly saving goals.
Get a grip on the meaning of cash flow
For successfully saving a part of your income every month it is imperative for you to have an idea about cash flow. It is an important concept that enables you to see the money you receive as inflows and your expenses as outflows. You will also have to save for buying expensive things like car or creating a business. As oxygen business is in trend presently your savings from the last 5 or 6 years will help you in installing industrial plant, gas plant related business like oxygen gas plant now.
Understanding of cash flow will aid your understanding of your income and expense. On top of it, you will be able to see where your money goes. Once you understand your spending habits it will be possible to make incremental changes to ensure more money is available for saving.
Work in tandem with partner
It is important to work in close partnership with your spouse if you are married or your partner if you are living with someone. Communicating your financial goals is crucial if you are to meet your financial milestones. It is imperative that spouses or partners are on the same page regarding expenses and saving.
Co-operation is the key for achieving your monetary targets. So both of you must rein in your desires, pool resources and stick to the plan. If you are not in together, there will be chaos and you will not be able to meet your target.
Understand difference between wants and needs
It is an important concept to understand the difference between wants and needs for accomplishing your saving goals. There is no denying the importance of identifying your needs and wants to realistically form a budget for monthly expenses and saving.
Have the courage to not go with something that does not help in meeting your financial goals. There are times when we have to spend on things out of social or peer pressure. It is the time when we must say not as doing so will derail our monthly budget.
Automate deduction of payment for savings
You must automate the payment for saving at the time of crediting of paycheck in your account. Waiting till end of the month to save, it is likely that you will have no money left to save. So it is a better decision to have the money portioned for saving deposited at the start of the month.
Depositing part of your paycheck in tax saving schemes such as PPF or mutual funds is also a good idea since it saves you from paying taxes and also delivers excellent returns.
Review monthly expenses
Most of the time we do not realize how much and on what we are spending our money. We must review our monthly expenses to know what we are paying for. It is possible that you might be buying stuff you actually do not need.
This is the benefit of reviewing your expenses. It will filter out things that you do not need and you can save that money instead. It will increase your monthly savings.