Saving money can seem like a foreign concept when everything already feels tight. At this point, you feel like you don’t have the space to buy the things you desire or save for your dreams.
Maybe you’re living paycheck to paycheck, but it doesn’t have to be that way. There is always a way to improve your situation, and you don’t have to accept that tight budget.
It’s all about financial knowledge. Learning about how you can improve from your current situation will be the way for you to get out of it.
People often feel like poverty is something you can’t escape, but it couldn’t be farther from the truth. Here are things you can do to change your mindset and begin working on your finances.
1. EXAMINE YOUR BUDGET
You may have been working on a budget, or maybe you haven’t. If not, it’s all the more reason you should create one. People don’t know how much they spend on one thing until they put it on paper (digital or otherwise).
The weekly taxis or monthly subscription plans are taking more of your money than you realize.
If you haven’t begun making a budget yet, a good rule is the 50/30/20 allocation. You allocate 50% of your salary to essentials, 30% to personal expenses, and 20% to savings.
“Do not save what is left after spending but spend what is left after saving.” - Warren Buffett
Yes, 20% of your income may not seem like much, but everything adds up over time. For others, it can seem impossible to save that much, which is why you need to list everything down first.
Once you have the allocation, you’ll be able to categorize spending: things like bills, rent, and food fall under essentials. The items you have that aren’t necessary to survive will fall under the 30%.
Don’t adjust your budget just yet if you see yourself needing more for essentials. Instead, ask yourself the question: "how can I save more money?"
The solutions can be simple actions like:
- End subscription plans you aren’t using.
- Turn the lights off when you don’t need them.
- Use more affordable services.
- Run appliances during off-peak hours when electricity charges are lower.
Only when you feel like you’ve run out of options should you consider making adjustments in your budget. Try to keep the 20% intact for as much as possible because it will be your path to saving money.