The math behind saving money is simple (Pay off debt, save more money and build) but not always easy however that being said, it’s totally possible for you to save successfully.
Budget before each paycheck
As a salaried employee, you should have a more consistent stream of income therefore it’s important to have a spending plan for your income before you receive a paycheck.
Include payments to yourself, for example, Retirement contributions or deposits to your savings accounts.
Prioritize saving money and your true needs like housing, transportation, and food costs. Once your needs have been met you can budget for items that are not necessities but are important for you to have. If your budget allows for it, leave room for fun money!
Set up a direct deposit to save automatically
Saving money shouldn’t be a chore. In fact, you can set up automatic transfers and withdrawals from your cheque or current account to your saving or investment accounts.
Saving 15-20% of your money from your salary is a great goal but doesn’t have to be the end goal.
Track your spending
One of the reasons we fail at budgeting is because we fail to track our spending. We assume we spend X amount of Rands on groceries when in reality it’s double that amount.
Tracking your spending will allow you to know how your salary is being used. Before giving up on saving money from your salary, review your spending for the last few months from your bank statements.
Reduce your costs on your true needs
The three budget areas that make up the bulk of costs are housing, food, and transportation. Reducing costs in these areas will leave you with extra cash from your salary to save.
Evaluate your current service providers and other expenses
This may be the most tedious of the tips but truly a 15-minute phone call can save you money. If it’s been a while since the last time you had an insurance quote now might be the time to evaluate your service providers.
Tweak your utility usage
Simple tweaks might help you reduce utility costs. Check for appliances that are plugged into their outlets, even if they aren’t being used frequently. Unplugging your cell phone and other electronic chargers when not in use could lower your electricity bill.
Don’t forget to check your lightbulbs! LED bulbs use more than 75% less energy.
Make access to your money inconvenient
When your money is less accessible, you’ll find that it’s not as convenient to spend it. This is simply because it’s just not there for you to spend right away.
A good idea is to put your savings money in a separate bank account, that you can access only when you need to.
Set up roadblocks to online shopping
Online retailers have made spending money easier than ever. With one-click buy options, impulse buying has never been harder to avoid. Don’t save your credit card information and create hurdles to purchase items online if online shopping has been an issue for you.
Remember, it’s all about paying yourself first.
Paying yourself first is not about getting that cute handbag, finally spending a day at a spa or even upgrading your tech gear. Paying yourself first is the process of saving for the future you.
In the future you may have a health crisis, may want to leave the workforce to raise a family, start a business, buy a house, or simply have a comfortable retirement.
Have you ever asked yourself how the future you will fund these circumstances? These reasons and more are why it’s important to save money from your salary.