If you want to save money this financial year which begins from April 01, 2018; the first thing you should do is stop bad habits that cause you to waste your savings or live beyond your means. Here are some ideas to get you started.
When it comes to saving money, there are many methods and techniques you can use, from installing a personal finance or money management application like Mvelopes/Good Budget/Mint and many others on your smartphone. You can also opt for small changes and set in motion everyday actions that encourage the accumulation of extra money or reduction of expenses, as well as explore techniques, such as the Japanese Kakebo, which allows you to save up to 35% of your salary.
However, in addition to the positive changes, it is also very interesting and important to avoid unwanted habits that can cause your finances to go off track. So today we’re picking up some bad habits that you need to break in order to save more money in financial year 2018.
1. Lack of Savings Goals
Without goals, there is no plan or strategy you can pursue. The money will not come by itself: take a notebook and pen or a specialized application, determine your short, medium and long term financial goals and track the actions you must take to achieve them. You may need to renew your car, want to go on holiday this summer or save for education. Every month you can schedule automatic transfers to a savings account, for example.
Read this: If you are a low income earner and want to earn extra income.
2. Spend What You Earn
Maybe you’ve taken carpe diem (i.e. enjoy today, don’t trust the future) too seriously and are going through life downhill without any kind of brakes, struggling to make ends meet at the end of the month due to waste, excess, online shopping and too much leisure. Reserve a fixed – or variable percentage of savings – from a minimum of one per month. You can also have specific savings jars for different areas such as leisure, culture, holidays and travel, eating out, training or household expenses.
3. Ignore Offers
In addition to creating a monthly fund to pay for expenses such as bills, receipts or rent, we recommend that you save money or bet on less expensive options when filling your shopping basket, such as private labels. It’s essential that you avoid impulsive spending, last-minute whims and the purchase of things you don’t need.
4. Spending Money from your Savings Account
If you have a savings account exclusively for a future purpose such as your children’s education, your retirement or other purpose, it should be untouchable. Otherwise, you’ll put your financial future at risk. It creates a mental and logistical barrier, such as betting on a high-interest savings account. Except for an urgent emergency, forget about it while your savings get fatter every month.
Additional reading: Start earning money while sleeping.
5. Unaware of Outgoing Money
Whether it’s drinking a few wines every day at the corner bar, bidding on eBay, paying for some bargains on Amazon or buying clothes every week, you should be aware of where your money goes, taking a more conscious approach to spending in 2018 to be more aware of the savings. Try to track spending to reduce waste and encourage your wealth growth at the end of each month.
6. Waiting to Save More to Invest
Contrary to popular belief, you don’t need to be a personal finance expert to make investments based on your ability to save and personal economy.
7. Not Prioritizing High Interest Debt
An effective debt strategy is to rank your debt in order of interest rate, from highest to lowest. It then prioritizes the payment of the debt with the highest interest rate, while still paying the minimum of all. So, your purpose will be to pay less in the long run. Another option, provided by personal finance experts, is to rank the debt in order of size and start with the smallest. This strategy is called the “snowball method” and is about building momentum to address growing debt.