Many people are struggling to save money, and many also have a hard time with their budgeting. However, with the pandemic and the ensuing wave of unemployment, not to mention rock-bottom interest on savings accounts, saving money has become ever more challenging. Fortunately, if you’re finding effective ways to save money this 2021, you can find some here.
Personal finance success is a balancing act between cutting back on outgo and increasing your income. Whether you’ve lost your job or you’re nervous about being laid off, it may be time to take a look at your expenses and be ready to tighten your belt. Many have lost their jobs with no emergency fund to hold them due to lack of saving during the good times in anticipation of the rainy days.
If you have money coming in, you can start saving, if you haven’t already done so. Here are some best practices to save money:
1. Know The Reasons For Your Savings
It may seem like common sense, but knowing the reasons for your savings is one of the most effective ways to save money. This is one of the biggest mistakes most people commit—not knowing their purpose to save. You can find guiding principles from Personal Money Store and other reliable sources when trying to save money.
It is important to define your why of saving. Just because personal finance gurus harp on the importance of having an emergency fund, make the goal of building an emergency fund (or X account) personal to you.
Don’t feel obligated to use other people’s goals when saving since you have your personal goals. Having a vision for your future will help you set a budget on how much you should save each month or each year to reach such achievements. That’s a start in becoming smarter financially!
2. Automate Your Savings And Regular Payments
Once you know your goals and how much you need to save, it’s easier to build your budget. However, the challenge is saving it, so automatic payroll deductions and transfers to savings will help to this end. Also, automating regular payments can help you avoid late fees.
This is an effective way to save money because a certain amount is immediately taken out from the paycheck before it arrives. A financial institution or your employer can initiate the transfer/deduction on this amount at the frequency you choose and put it in an account separate from your main checking account.
By doing this, you can get ahead financially without having to remember to transfer money every time you get paid.
3. Look For Free Entertainment
Likewise, you can save more if you opt for free entertainment rather than paying subscriptions. Of course, you don’t want to deprive yourself of the joy and excitement of entertainment, but opting for free entertainment readily available could give you the same amount of happiness and relaxation.
If you’re serious about saving money, challenge yourself to have a zero dollar budget for entertainment for a month. See how it goes, and adjust course if need be.
Here are some ideas for free entertainment:
- Go to a free video-streaming website and maximize available resources
- Search for a meetup group sharing the same interests
- Register for free trials for various streaming services. Just do not forget to cancel before the trial is over.
- Try doing the crossword puzzle or geek out with Joe and play an exciting board game
- Check out your local library and community center for free programs and activities
These are just some of the many free things you can do to entertain yourself. Don’t allow other people to convince you to spend money on entertainment. Remember your personal goals when you feel tempted.
4. Think Twice With Big Purchase
Aside from paid subscriptions, you should also think twice before you spend a big amount. You might think this is a common tip when saving money, but a lot of people are having a hard time meeting this step and end up feeling regret after buying a big ticket item.
Thus, before you decide to make a big purchase, you must consider the following things:
- Your goal
- Your budget
- Additional expenses involved
- Other allocation for the money
- The urgency of the purchase
- An available item you can borrow so you don’t need to buy one
- Return policy
Putting it together
It is common knowledge that saving money is a must for everybody. Creating your own list of priorities can help get you started and stay on track on this wealth building journey.
If you make saving money a habit, you’ll achieve financial stability, and eventually abundance.