The old formula of “INCOME – EXPENSE = SAVINGS” no longer works. The better approach is “INCOME – SAVINGS = EXPENSES” .
This way, savings is assured and expenses are restricted to what are essential.
After coming up with a budget, religiously follow a strict saving plan. So, how to save? Make it a priority!
• Write down what you’d like to save money for – a computer, a mobile phone, etc.
• Figure out how much it costs.
• Set a timeline for when you’d like to reach your goal.
• Set a schedule by dividing the total goal amount by the number of weeks, months or pay periods between now and your goal date.
• Be vigilant be treating your savings contribution just like any other must-pay expense, such as rent, phone bill, or groceries.
To find money to save, some experts recommended to do the following practical tips:
• Keep track of all your expenses within the week. You might be surprised at what you’re buying, and what you can do without.
• Rank your non-essential expenses. Keep the ones you like the best – the ones that rank high- and cut out the items at the bottom of the list.
• Pack a lunch. Or cook more dinners at home. Eating out in restaurants can eat up a lot of money that could otherwise be saved.
And how much exactly should you save? According to experts, people should save at least ten percent (10%) of their income or make sure that savings are enough to cover at least three months’ worth of living expenses, just in case something unexpected happens such as losing a job or hospitalization or medical bills.
There are many ways or options to accumulate that nest egg. If you can afford it, it might be worth getting a personal finance coach if only to ensure that none of your hard earned money goes to waste.