Money makes the world go round, or so they say. But for most people, especially in these times when the dollar is weak and there is a fear of a national and global recession, money may be hard to maintain. However, what most people don’t realize is that they can save thousands of dollars a year through simple, yet effective methods that are as simple as putting away 400 Rs a week.
Pay yourself first. Any financial planner will tell you that paying yourself first is the most beneficial thing you can do to save money. This means that whenever you receive any amount of money; paycheck, birthday money, gift, or even a $20 bill you find on the street, you don’t decide how to spend it, you decide how to save it. Most people when they receive their paycheck, they pay their bills, mortgage or rent, and buy everything they need for the month; food, clothes, and anything else. Usually by the end of the month, they have a couple dollars left that either goes into their savings, or they spend it on something they probably didn’t need. This is the way you never save any money. In order to successfully save money every month, you need to place a certain portion of your paycheck into your savings account before you spend a single cent on anything else. As a rule of thumb I live by, try putting 10 percent of your paycheck into your savings account. Not only does this help you save a constant sum each month, it also helps you better plan how you are going to spend the remaining money between bills, mortgage or rent, and any other expenses you have.
The next rule to live by (and save by) is to have multiple savings account. Currently I have three savings accounts, each for a different purpose. The first account is my Emergency Account, and like the name suggests, its for emergencies only. In the last two years, I have never had to touch the money in my emergency account, and it currently has a balance of about $4,000, though I suggest anywhere from $2,000 to $5,000 is sufficient for an emergency account. The purpose of an emergency account is to prevent you from having to put any emergency expense (hospital visit, car repair, home repair, etc) on credit. The second account is what I like to call My Account. This is the money I am saving to buy something for myself, currently it is a new laptop. I try to deposit anywhere for $20 to $50 a week into this account. Though it may not sound like a lot, you will be surprised at how fast your money will begin to accumulate. My third account is my My Future Account. This is a long term saving account that I usually try not to touch. My long term account is a money market fund, but you can open any type of high yield savings account. For a full list of the top, high yield saving accounts, search “high yield saving accounts” in Google.
Similarly, if you have multiple saving accounts, why not have multiple checking accounts. I have two separate checking accounts; one for bills and the other for any monthly expenses. I have noticed that since I opened up my second checking account, it has really forced me to better manage my money as I know exactly how much I have for my monthly spending, and once I have spent that money, that’s it. I highly recommend opening a second checking account if you don’t already have one, as it is a great advantage to have when trying to save money.
Hopefully these tips are enough to get you started saving money. All of the things I have mentioned are extremely easy to do and in the long run I am sure you will be pleased with the results they yield.