How to save money

Savings give you peace of mind when unexpected expensive emergencies happen. 4 steps on how to save money

How to save money
  • In this short 6 minutes read article, we shall answer:
  • Savings and illness
  • How to find a side gig that pays

3 main benefits of saving money

The importance of building a savings fund is that it gives you peace of mind. A greater sense of security. With money saved for emergencies, you may even have the ability to spend on some luxuries on yourself sometimes. A pretty good reason to start saving money. 78% of workers live paycheck to paycheck.

 

Once you get into the habit of saving money, then you will one day look back in peace of mind state be proud of yourself. Besides having an emergency fund, here are three quick reasons to save money:

  • Peace of mind in case of job loss. Reduced income happens quite often. How will the loss of income affect you? With six months of spending saved, you have time to rebalance your situation
  • In case of illness. Prolonged hospital stays can be devastating to finances. Lost time of productivity and medical bills that may not be covered by insurance. No need to get into debt over medical bills.
  • Money working for you. You can have your savings in a money market account that is highly liquid in case you need it, but it will be earning interest or other kinds of gains.

4 Steps on how to save money

 

Saving money is not easy, especially when you don’t have much to spare. We all know we should save but just knowing is not enough. The reasons to save are not questioned. Here are four steps to follow.

Know the exact money that comes in and goes out. This is step one for effective budgeting. You will never meet your budgeting goals without getting a complete handle on how much you spend, versus how much you bring in. You may want to start a side gig, here are factors to consider before starting a side hustle.

Once a budget is established, start looking for the expenses to trim. Cut the cable and go streaming for less. Switch phone carriers for less. Get a new car insurance quote and pay lower premiums. 

What is your goal? If you spend $4000 on monthly expenses for your family, do you want to save $24,000 for six months’ emergency living expenses? If you need $30,000 for a house down payment, you already know the exact amount/goal to work for. 

Set an exact amount to save with every pay period. Whether you are paid weekly, bi-weekly, or monthly, identify exactly how much will be your minimum savings and stick to it. This is after all living expenses are paid and paid down whatever debt you may have.

Automate your savings. Just like taxes are deducted from your paycheck, you can also automate your savings the same way. You can set up automatic bank transfers from one account to another, just talk to your bank representative. You can also set up money-saving mobile apps Stash that save your change on every purchase. 

 

2 Must Consider Tips 

 

  1. As you build up your savings, it is important to also pay down debt. If your debt is too high, you may consider allocating more money to lowering your debt than savings. It is still important to put some away for savings. Here are some debt relief options.
  2. Consider starting a side hustle. With many people working online now because of technology, you can find side work for extra income and work from home. You will learn new skills and hopefully turn the side work to a full time thriving business with time.