How to Save Money Each Month From Your Salary
Today, I have a guest post from Samantha Jones.
In today’s economic scenario, it is tough to put away money from salary for the rainy days. Nowadays, most of us live from paycheck to paycheck; striving to meet sky-high living expenses. But even then we should have a savings goal of at least 3 to 6 months of living expense since an emergency like a job loss, or health issue can happen at any point in time. Saving money is difficult, but luckily there are some ways that we can surely explore. In this post, I will go over a few ways that will teach you how to save money each month.
Setting and sticking to a strict budget
Keep track of your expenses – Save receipts for all expenditures you make in a month. Accumulate all monthly bills and sort them into two categories – fixed and flexible. Categorize them further into two sub-categories – needs and wants. Be focused on your needs as you can’t compromise with them while you should be careful about spending to meet your wants.
Create a plan – At the onset, consider your net monthly income, in most cases your salary after deductions. First, subtract fixed expenses and then calculate what 10% of your net income is. This should be your minimum financial monthly goal. Now subtract the number from what is left of the paycheck. The rest amount is what has to work on to figure out your budget.
Avoid impulsive buying – Always avoid larger purchases which don’t need an immediate decision. If you’re not careful about your spending, even a short trip to a mall or just a few mouse-clicks can blow your entire money.
Reducing monthly bills
Reduce energy consumption – Electricity is a large expense that you disburse each month. Do your wallet as well as the environment a favor – cut back on your energy consumption.
Reduce service levels – Shop around for a different carrier for your phone, Internet, and even insurance. You may find better offers from the vendors that have introduced new plans. Assess if your present coverage level is right for you and if not, simply switch to the better one. Try to negotiate with your existing provider for a better rate. If you tell them your intention to switch to their competitor, they may provide you with a better offer.
Purchase a car with better gas mileage – If you’re looking for a new car, make sure your new purchase offers high value for your money. Opt for a model known to last a longer time with low maintenance cost so you can immediately start to save money with better mileage, especially if your car is your medium of transit.
Refinance mortgage – If the credit rating has improved since purchasing a home, it would be better to refinance the mortgage. Since many homeowners find their credit rating getting improved over time, they may get a lower interest rate than what they did a couple of years back. Refinancing may result in lower monthly payment and thus less money to be spent towards interest.
Curtailing your spending
Be smart with your food – Food is a necessity while it is a problematic arena for over-spenders. Cheap food doesn’t always mean to be unhealthy; there are plenty of options to pay less sans sacrificing the quality and nutritional value.
Spend less for entertainment – Most people spend a good portion of their income on entertainment. Fortunately, these are the ones where you can have the most control over and so the easiest to cut back on.
Appraise subscription services – Cancel everything you don’t use enough to be worth the expenses. For example, in the era of the high-speed Internet, you can surely eliminate your cable connection. Eliminating beauty boxes, video game subscription, magazines, etc. may seem small initially but add up to a good amount over time.
Having extra income
Sell things you no longer need or use – Go through old items and consider selling things that you no more use or need. Sell big-ticket items such as furniture instead of throwing them away while you replace them.
Start a business – Make use of your extra time to start a simple and easy side business like dog walking or babysitting.
Sublet extra space – In many localities with high living cost, it is very common to sublet second or third bedrooms in your house or apartment. This can effectively net hundreds of dollars to put towards the savings.
Saving money each month is not a big deal; all you need to be a bit tricky and frugal. This is a rule of thumb for a debt-free, financially stable life not for the time being but for your future too. Discussed above are some easy to follow ways to put money aside from your salary and so enjoy financial freedom.