Do you want to do a better job of saving money while enjoying a
bit of entertainment, too? This article features a simple way to save, enjoy
and not have to worry all the time about money. Read on to find help in being
financially disciplined.
Organize all your financial documents. Create a file folder or a cabinet or box with
sections for all your expenses, insurance, assets, income and liabilities. You
could label the folders this way:
- House/apartment
- Income
- Insurance
- Medical
- Vehicle
- Utilities
- Taxes
In each folder put everything
associated with the category.
For example, under "house/apartment" you would keep mortgage or
lease/rent documents. Under "utilities" you'd file gas/electricity,
water, sewage, tv/internet, and phone bills. Note everything you spend on
entertainment, groceries, and gas.
Determine how much you spend in each category. Some
expenses are unavoidable, such as mortgage/rent and utilities. However, you
could reduce your monthly expenses in other categories by first determining how
much you spend there and how much is absolutely necessary.
Create a balance sheet with all your
income in one column and all your expenses in another. Do this for at least three months to
determine a pattern. By doing this you get an idea of how often you eat out and
how much you spend on movies or other entertainment. You'll begin to see where
you might be able to reduce costs.
Set goals. Write down everything you want to accomplish.
Include estimates of how much your goals will cost and how long before you
achieve them. For example:
- "Buy a house: $200,000 with a 5% down payment. Save $10,000 by June 2020."
- This will give you an idea of how much you need to save to reach your goals.
Once you've identified your goals,
determine which are short-range goals (within five years), and determine how
much you will need to put aside every month to reach them. Let’s say you want to buy a $30,000 car. You
can take out a loan for $30,000 that you will need to pay back in three years.
You will have monthly costs (not taking interest into account) of approximately
$833.
Save as much as possible for a down
payment. This will reduce
the amount of the loan and the interest you'll pay on it. Be realistic in
setting money aside, because you'll have to continue meeting your living
expenses.
Ask your payroll department to deposit
a certain amount from your paychecks into whatever retirement account your
employer offers. By paying
yourself first in this way, you can save money for retirement without even
seeing it (and being tempted to spend it). Spend only a part of what's left in
each paycheck. Try to save as much of what remains as you can. You may find it
hard to maximize your savings, but as you near retirement, you will be very glad
you did.
Deposit some money into a savings
account for emergency purposes.
Try to maintain an emergency fund consisting of roughly six months' worth of
normal expenses. This will help cover costs should you lose your job or become
temporarily incapacitated.
Find ways to reduce costs. Using a budget will help. Here are some
examples:
- Watch matinee movies instead of higher-priced evening showings.
- Eat out once or twice a month rather than once or twice a week.
- Make your own coffee and take it to work or school rather than stopping by a coffee stand on your way.
- Leave your credit cards home when going shopping. If you're determined to use a card, pick one with a generous rewards program.
- Don’t go grocery shopping when you're hungry. You may buy more than you need at such times.
