Ability to save money is a basic skill that every individual should possess. This skill can be built only when you follow certain important steps, having internal motivation and positive attitude. In order to acquire the ability to save money, you need to inculcate some habits that may be painful but will help you reach your savings goals.
Here are 4 such habits which will help you gain the ability to save money.
Track your spending – create a budget
For many people, creating budget is very boring and painful. But, the fact is, you cannot understand your spending without having a proper budget. It is a tool that helps you know where your money is going.
You need to allot a specific amount of your income for every head. The various heads are food, clothing, transportation, entertainment, health, etc. Assume that you have budgeted Rs. 2000/- for food in a month, then, you need to limit your spending on the food throughout the month to the amount set.
Budgeting helps you plan before your spend. Thus, budgeting is a crucial step to save money as it allows you to control your spending. Otherwise, you may not know how much amount of your money is being wasted.
Spend less than you earn
This is the basic motto of personal finance. As an earning individual, you should understand that, spending less than what you earn will help you reach the ability to save money. No matter, how much you earn, you need to live within your means to lead a sensible life.
Once you start spending more money than what you earn, you start thinking about taking debt and purchasing things on debt. Debt is a kind of addiction, once you get habituated to it, you find it difficult to get out of the debt-trap. So, stay away from credit cards and people (friends/relatives etc.) who provide or accept debt.
Controlling spending does not mean that you need to behave like a miser. It only means that you should spend money wisely.
For instance, avoiding eating out daily will not only help you control spending but also will help you stay away from bad health issues. Eating out only on special occasions with your family would let you enjoy the food.
So, limit your desires. Spend money only when you have accumulated enough savings for emergencies and future expenses. You must practice self-control to reach the ability to save money.
Inculcate disciplined savings
Try to inculcate the habit of saving. Set some amount of your income as savings. By preparing a budget, you can understand how much amount of money you can set aside as savings.
You need to save money following a step-by-step process. Start saving small amounts of money on a monthly basis. Open separate bank accounts for -
• Non-monthly expenses like – clothes, shoes, etc.
• Short-term savings for purchasing electronic gadgets (computer, Television etc.), buying a vehicle (bike or car).
• Long-term savings for buying a house, kid’s marriage, etc.
Self-motivation is the key to inculcate the habit of savings. Following these steps sincerely would help you achieve the ability to save money.
Money Chutney provides insightful articles on saving, investing, budgeting and financial planning. These articles are intended to provide knowledge and make people aware of methods and techniques on personal finance, so they can use it to better their financial situation. These personal finance strategies are targeted towards educated middle class people in India, who typically look for information on how to save money.