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The Smart Ways to Save Money Fast (Even If You’re a Big Spender)

The Smart Ways to Save Money Fast (Even If You’re a Big Spender)

Are you under the constant impression that you are barely making ends meet? It is almost impossible to treat yourself with something expensive, as you seem to have just enough money to get by through the month.[1]

Also, you have no major expenses on a daily basis, you pay the bills, you eat out maybe once or twice, and then you get your monthly subscriptions and maybe one or two new items. Yet, you still end up wondering where all your money went.

Furthermore, it has definitely occurred to you that you might need to get credit at some point, either for a new car or for an apartment, and that requires a positive credit history. All of these are valid and troublesome concerns, especially if you don’t have at least $1000 in your savings account.

So, here, we will go over how to increase your savings and become more prudent, as well as why saving money is tricky but necessary.

I got it, we save money today to prepare for a better future.

We are all fully aware of the reasons why it is important to save money. For starters, it is the first and most important step towards financial independence.

The second reason is that we need savings in the event things go south for some reason, or if we need money to buy or repair a piece of equipment that is necessary for our work or of us to earn money.

Lastly, you need to know how to properly manage your finances in order to have a positive credit score, which will make it easier for you to get a loan if you ever need one, and you will also have lower interest rates when returning that money.

But saving money always seems to be so difficult…

One of the main reasons why saving has become more difficult is due to micro transactions and monthly subscriptions.

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If you want to save money, you need to give up a magnitude of smaller things rather than one or two of them. In other words, any attempt to save money by cancelling one subscription for example seems meaningless, since you aren’t saving a lot to begin with.

Another reason why we struggle with saving cash is because of our daily habits. We have developed certain tastes, and certain rituals that we tend to indulge on a daily basis, so very often, saving money warrants a fundamental change and people are not really fond of them in general.

Moreover, if you have a lot of bills that require immediate attention, it is difficult to think about saving money, when there are clearly more pressing matters.

So, spending money provides us with short-term positive feelings that we have kind of grown addicted to, whereas saving money does not. So, we are in a way stuck in this hedonistic treadmill,[2] and we just continue to live on paycheck to paycheck.

What can I do to start saving money?

Now let us go over some of the techniques, habits, and tricks on how to start saving money on a monthly basis. If you somehow manage to adhere to all of these tips, you can look forward to a significant amount of cash. However, we are all aware just how difficult it can be to drastically change your life, so you can also introduce these new methods one at a time.

1. Say no to extended warranties.

Whenever we buy something we want to make sure that the item is high quality and that it will serve us for months or years to come. As a result, we are very often tempted to buy extended warranty, which is, in a way, a waste of cash.

First of all, if you are not particularly clumsy and if you do not cash in on your extended warranty, then there is no need to get one in the first place.

Second, we hate using the same thing for more than a year, so it is very likely that you will buy a new item or gadget even if the old one is still working.

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2. Buy refurbished gadgets.

Here is a really good way to save a significant amount of money and get good products at the same time. We usually pay more for something just because it has a strong and well-known brand name behind it.

There is no reason to think of that as a bad choice; after all, a renowned brand means greater security, but it also means that it has good products in general.

In other words, buying branded refurbished gadgets can help you get amazing and useful tech without spending a fortune on it.

The downside of it is that you will not be up to date with the latest product, but eventually, they will be available as a refurbished phone or tablet, or any other gadget.

It is a good way to test yourself if you are buying out of peer pressure and to stay relevant, or if you are buying because you are acting on impulse.

3. Make it a weekly challenge.

A very useful trick for saving extra cash on a monthly basis is the so called weekly challenge. Much like with any game there are the easy, normal and hard mode, and this is how it is done. Basically, you set a weekly sum for yourself that you need to put aside at the end of the week.

You can go with $1, $5, or $10. The key is to double the amount at the end of the next week and so on until the end of the month. So with $5, you have $5 at the end of first week, $10 at the end of second one, $20 at the end of third and $40 at the end of the month.

This is why it is way more difficult to pull it off with $10 as your starting sum. It is a really good way of saving money, and you need to invest it with the rest of your savings into your savings account, in order to accumulate a more significant savings stash.

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4. Train yourself to be more patient.

Patience is a virtue and for a good reason.[3] When it comes to saving money, you can save a lot if you are patient.

First of all, it gives you more time to research and discover better items at a more available price.

Second, you can wait until there is a sales incentive or discount at the store before you buy something expensive.

Third, many stores offer discounts if you purchase multiple products, so it is better to save money and then purchase in bulk because you are going to save more this way.

5. Save your spendings on transport.

We tend to spend a lot of cash on transport, whether we’re buying gas, or even worse, if we use a cab to get by.

If you make a deal with friends from work to car pool, you can reduce the carbon footprint by relying on one vehicle, and you can save money on gas.

If you spend too much money on taxis, then you should immediately switch to public transport. This is far more convenient and cheaper, plus when the traffic is busy, you will actually get to where you need to be more quickly.

Simply get a monthly pass, or store value on your metrocard to save more money and start walking a bit; it will do you good. Alternatively, you can buy a bicycle and use it to commute; it is also convenient, cheaper, and great for your health.

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6. Cancel unnecessary subscription.

As mentioned, a great portion of our funds is funnelled away due to our monthly subscriptions that we do not even fully use. So, limit yourself to a single subscription that you are going to like the most during one particular month.

Private networks like hulu or Netflix usually announce what their users can expect in the upcoming month, so you can check that content in advance and decide which network you are going to use for that month.

7. Don’t pay for brand names.

We tend to pay a lot for big names and influential brands, and these products are usually overpriced for no reason. Sure, you might want a particular phone or PC to have strong components and, since it is a long term investment, you do not mind spending a bit extra.

However, when it comes to chargers, HDMI cables, headphones, or adapters, you can find decent products at a lower price that are going to get the job done. So, when you are buying something, it does not need to be from an expensive producer at all costs, and you can save a lot if you opt for less known, yet still competent providers.

8. Avoid eating out.

One way of committing financial suicide is by eating out frequently. Sure, we love the service, and that food is instantly prepared, but as mentioned, it is important that we practice patience in order for this to succeed.

It is far cheaper and healthier to prepare your own meals, plus you get to learn how to cook.[4]Today, we have pages and video clips that help us prepare meals, so there is really a small chance that you can mess it up, considering the amount of instructions you can get.

9. Consider energy saving appliances.

Finally, the money you save can be invested into energy conserving appliances and this helps you reduce the amount of money you pay for the bills. You can get energy saving light bulbs, as well as other appliances that spend less electricity, and you can even buy solar panels at one point.

Moreover, you can check your electricity provider to see how much they charge and switch to another one in your area that charges less.

Well these were the tips that can help you save money; you should also make sure to look up how to earn extra money online, just so that you create an even bigger savings account.

Some of these don’t require too much effort, others may include learning new skills, but mostly, it’s about practicing patience and restraint. Hopefully, you will find this article insightful and inspiring, and it will help you save some money.

Reference

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Nemanja Manojlovic

Editor at MyCity Web

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Last Updated on September 2, 2020

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways to set financial goals and actually meet them with ease.

4 Steps to Setting Financial Goals

Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a two-step process:

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

If you’re not sure where to start when tracking expenses, this article may be able to help.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

  • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
  • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
  • If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

Making Smart Investments

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

1. Consult a Financial Advisor

Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

2. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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3. Compounding Is the Eighth Wonder

Einstein once remarked about compounding:

“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

Use compound interest when setting financial goals

    Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

    Start saving early so that time is on your side to help you bear the fruits of compounding.

    4. Measure, Measure, Measure

    All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

    If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

    Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

    The Bottom Line

    Managing your extra money to achieve your short and long-term financial goals

    and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

    More Tips on Financial Goals

    Featured photo credit: Micheile Henderson via unsplash.com

    Reference

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