Even though everyone knows the benefits of saving, it is easier said than done. The savings habit, or culture, is not a function of how much you earn, rather it is a matter of discipline. Many people would like to save, but lack the will, or guidance, to consciously practice it.
Below are Top 7 tips to help you develop a personal savings habit:
#1: Live Within Your Means
It is practically impossible to save when you spend all that you earn. Or, worse still, if you are living above your means. Constantly do an audit of how much you are spending, and on what. And then look for areas where you can scale back. Such scaling back invariably provides opportunities to save for the future.
#2: Watch What You Do With Your Spare Time
Too much extra time leads to spending extra money. For instance, if you are spending too much time at the bar, or on online shopping, you would be surprised how much it is costing you
Spend more of your free time on activities that do not cost you any money – like reading, exercise or taking a walk in the park – and your wallet will thank you!
#3: Avoid Expensive Habits
Bad habits could be a financial cankerworm that eat away on your finances, without you being aware in time. Be honest with yourself and examine areas in which you are habitually spending money, that you can actually do away with.
#4: Have Automatic Savings
Consider arrangements by which you can save money automatically, especially at source. Technology can help in this regard. If you have an online account, you could arrange, for instance, to programme it to have 10% of your income routed automatically into a special savings account. You could also use standing orders with your bank to achieve this. And then you can scale up – or down – as you go along
#5: Refinance Existing Loans
There is a growing number of companies that can help you refinance existing loans, often with better interest rates. Take a good luck at your existing loans and their interest rates, and find out if you are eligible for loan refinancing, with lower interest rates and adjusted payback period. That should help you free up some money for savings.
#6: Find A Side Hustle
Look for something to do on the side, beyond your 9-5 job. Something that you are passionate about, that could earn you some extra income after hours. There are multiple avenues and ways to turn your free time into cash time. Think Uber, Lyft, Air BnB, Etsy, Ebay, Poshmark – and the list never ends. It is a sharing economy, get in and cash out!
#7: Plan Your Finances
As much as you can, plan your finances. Build a budget, and stick to it. Forecasting your needs and planning around big purchases is key to financial success. List exactly how much you need to spend on what, and save the rest! It will give you the power to take the control of your finances and will benefit you immensely.