Help! I Can’t Save Money! Not all income-earners can save money. While saving money may not seem to be an easy task, it is an important preparation for your financial future. Before you start saving: • Make a budget An accurate budget will allow you to identify all of your necessary expenses, which in turn will give you the ability to calculate exactly how much you can afford to set aside for savings. Here are some simple steps to setting up your budget: 1. Set a time frame Is it going to be a monthly, quarterly or yearly budget? 2. Consider income Figure out exactly how much income you have . This should include your monthly salary (after tax) and any supplementary income you may have (from additional jobs, investments or other income sources). If you are in a salaried position, simply divide your yearly income by 12. 3. Expenses Monthly income? Find out how much you spend during the same period. While some expenses remain constant and are easy to figure out, expenses such as utilities, gas, food and entertainment may change from month to month. So, the best way to integrate them into your budget is to come up with a monthly average for each one. 4. Calculate the surplus Now you can start to determine how much you have left over for savings. Simply subtract your monthly expenses from your monthly income to find out how much surplus that streams in each month. 5. Keep records While writing out your budget on a piece of paper once every year may seem the easiest way to go, it is wiser to constantly keep records of your expenses, income and savings, in a permanent location for easy update. How do I save? 1. Stop using credit cards Pay for everything with cash or money orders. Don’t even use cheques. It’s easier to overspend when you’re pulling from a bank or credit account because you don’t know exactly how much is in there. If you have cash, you can see the outflow and know when to apply the brake. 2. Keep track of your finances The best way to make sure your savings plan is on track is to keep a close eye on your spending. This can include monitoring your ATM withdrawals, keeping a copy of your bank statements, collecting receipts from your entertainment spending or updating your budget to reflect changes in your income or expenses. Not only can this help you identify where your money is going, it can also keep you up to date on how much you are saving . 3. Invest Although most people think that investing is something done by people who already have a lot of money; but this is not so. People with a modest income need to develop the practice even more, as it helps them to help grow their overall savings. Some banks may even let you set up an Automatic Investment Plan (AIP), which automatically takes a portion of your savings account (as much or as little as you can afford) and transfers it to an investment fund or retirement account. 4. Open a savings account One of the basic tools you can use to help manage and further your savings is a savings account. Not only do savings accounts provide a safe, secure and convenient place for you to store your money , they can also help build your savings. 5. Curb your spending The easiest and quickest way to start saving money is to curb your spending. For instance, you don’t have to buy a designer dress all the time, you can opt for cheaper brands at other times. 6. Don’t buy things you can’t afford One of the main reasons that people go into debt (and consequently cannot save money), is that they buy things they can’t afford on credit. Even if you eventually pay off the debt, the extra money that you pay in interest will mean that you’ve paid more for the item than it’s worth . 7. Pay yourself first Deposit savings into an account (or your piggy-bank) as soon as you get paid. An easy, effective way to start saving is to simply deposit 10 percent of every cheque in a savings account. 8. Perseverance needed To become a millionaire is possible if you set up an aggressive savings plan and stick to it. You may be surprised how much money you can put away for something far more enjoyable than what you could buy with short term savings. (Kemi Lawal)
Posted on: Mon, 25 Aug 2014 08:39:40 +0000
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