How to Save Money Fast
Most people hit an emotional brick wall when confronted with the task of cutting down their monthly spending. That is completely normal but the brick wall can be surmounted.
Just because saving money seems like an impossible job does not mean that you cannot do it quite easily. All you have to do is follow these simple steps methodically. Do not allow anyone to divert you from your course.
Before you start, look at the benefits that will accrue to you from carrying out this plan:
• Peace of mind
• Ability to build up capital
• Lose your fear of saving
• Find your financial independence
These tips on how to save money offer huge benefits. Follow each of the following steps and get on track to financial freedom. Tip: it might take a couple of days to work through the list and come up with meaningful answers. It will be worth it.
1. Involve your family. If you merely want to save money for better days or specific purposes, or you want to save money in order to live better and pay off debt, or you are planning to go the whole way and build up a substantial nest egg, you must involve your spouse, children and any other dependents. They have to pull the wagon with you and support you as you work through the following steps.
2. Know what you earn. You might think you know, but do you really? Do you now what your net salary is, after deductions, to the cent? What other bits of regular income do you have? If you work for yourself, what is the absolute minimum that comes in each month? Figure it out and write it down. It doesn’t matter how little it might be. Just do it.
3. Know what you owe. Write down everything you owe in total. Divide these into two sections: First section - monthly payments e.g. mortgage, bank loan and Second section - lump sum payments e.g. credit card, owing to friends and businesses.
4. Identify main expenditure. This is about the same as drawing up a monthly budget. Find out what you spend the most money on. Make an intelligent estimate where you don’t have the documentary proof. Tip: you main items will be mortgage, car payments, food, school expenses, phones, and medical insurance and utility bills. Do not leave anything out! Go over this list repeatedly until you have covered all the bases.
5. Cut your income. Tip; this is a tough one, but it is essential. Whatever you earn, reduce it by 25%. So if you earn $4000 per month, reduce it to $3000. That is the figure you must work with.
6. Work out a monthly budget. Work out your regular monthly expenditure, then cut your coat to fit your cloth. Tip: like cutting your income, this is counter-intuitive, but it must be done. If your expenditure exceeds your income (remember you are using the new 75% income figure, just find ways to cut it. If you have to move house, sell a car, take out the house phone, lose cable TV or take a child out of an expensive school, just do it. Don’t hesitate. Try and take these drastic steps in a single morning. It will be easier that way
7. Make arrangements to pay off debt over 6 to 12 months. No creditor of yours will refuse if you want to arrange to pay off your debt. Work it out so that you use the 25% of the income that you put aside to pay off this cold debt.
8. Live frugally until your cold debt is paid. Do not create any new debt. Tips: Return your credit cards, don’t go out to eat, don’t shop for luxuries, find out how to save money at the grocery store, cut down on energy consumption, cut down on phone calls and go to the mall only twice a week. Use your spare time to look after your assets e.g. mow the yard, clean the car, repack the shed, spring clean the house, find a better job and do extra work for residual income. If you are going to get married, be creative in looking for ways how to save money on your wedding. Settle for a modest ceremony and reception.
9. Continually look for ways to cut down spending. Find out how to save money on electricity, which is a huge consumer of cash. Contrary to what the advertisements tell you, saving money means not spending at all and not simply spending less. Find creative ways to avoid spending. Tips: plant a veggie garden, start a car pool, join the library, make your own clothes, start a supper club with friends and let the children earn their pocket money. Share ideas with friends on how to save money grocery shopping.
10. Save 25% and stick to your plan. When the cold debt has been repaid, live just the same as you have been living. But now you put the 25% into an extremely safe and conservative investment program. They will grow dramatically and eventually your 25% will grow into a fund that funds you. This is how to save up money. Under no circumstances spend this money. If you are tempted, just work through this list on how to save more money from the top once again.
