“The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and broadens the mind”. –T.T. Munger
2020 was a year of challenges; it affected individuals’ physical and emotional well-being and significantly impacted the economy.
Many of you have lost your jobs and had a hard time dealing with finances. The year 2020 taught us the importance of saving.
Now that we have entered 2021, all we can think of is our new years’ resolutions, and a critical question arises in our minds – how do we control our expenditure and save more money in 2021?
Most of us promise ourselves that we’ll save enough money at the beginning of each year, but due to a lack of knowledge on budgeting, we spend all our incomes or sometimes beyond that. But this year let’s stick to our plan of saving money. Even if your sources are not consistent, you can save money. Here are 15 budgeting tips by financial experts that would help you save money in 2021:
1. Have An Aim –
Like people always say – “it’s all in the mind”, we have to prepare ourselves mentally to cut off a few expenses from our daily habits. Let’s suppose we aim to buy a car in 2021, and then we have cut off costs like booking a cab to work, we can rather travel on a bus. Our plans for savings depend more or less on our goals. So having a firm goal will help us save more and spend less.
2. Track The Expenses –
It is imperative to understand where our money goes and spend our cash mostly every day. If we can track our expenses’ outflow, we can have control over most of the spending habits. We need to understand if our costs are essential or not. It is suggestible to keep track of the expenses.
3. Prepare A Budget –
Once you track our expenses, you can determine how much money we have spent the previous month. Understanding our expense pattern, we can prepare a realistic budget. The budget should summarise the expenditure we are expecting out of the income we get. An account will help us understand which expenses are significant, and which ones can be avoided. It also gives us an idea of how much we can save.
4. Pay Off The Debts –
In order to pay off debts ideally is the first factor, one must think while preparing a budget. Once we are free from all the debts, we can plan a budget where most of our earnings don’t get cut for debt payments. If we still want to save when we are under a debt burden, we need to cut off every unnecessary expense.
5. Decide The Priorities –
Once an aim is set, we have to decide what is the biggest priority for us. We can analyse based on our past expenses and understand how we can save money rather than unnecessary things. Remember, even if we regularly spend a little money daily, it later piles up to a larger amount. So we need to understand what it is that we want and what can be saved for later.
6. Deposit In An Investment Account –
If we are not sure where to invest our money, we can open an investment account in our banks, and put in some money every month inside it. A key point to remember should be that it is not a savings account, rather an investment account.
7. Save The Easy Money –
When we say easy money or found money, we mean the money we get on our birthdays or special occasions. It is very fortunate to receive such gifts, as it’s not a part of our typical source of income. Thus, saving it instead of spending it, is always a better option.
8. Clear The Credit Card Bills –
Using credit cards are always a good option, but sometimes we tend to overspend, and at the beginning of the next month we are faced with an inevitably large credit card bill. Even when using a credit card, we need to keep track of the expenses, and we pay off the amount immediately instead of prolonging it for a significant amount of time.
9. Look For Other Ways Of Income –
Understandably, looking for other ways of income might be hard work, and we need to invest much time. But it is always great to have multiple sources of income to have the same flow on our savings. A freelancing work or a part-time job has consistently helped many to save a lot.
10. Find The Investment Options –
These days investments options have become supernumerary as we can invest on a fixed deposit, recurring deposit or on stocks/derivatives. These options have a chance of higher returns but also have higher risks. If we are ready to take risks and have proper knowledge of these investment options, we can always invest and save our money.
11. Use Automatic Deductions –
When we are very firm about our savings decisions, we can link several savings or investment accounts to our salary account. In this case, whenever we receive our salary, the savings automatically get deducted and go to the linked accounts. It will help us track and maintain a healthy budget without having to do a lot of work on a monthly basis.
12. Have An Long-term –
Goal – Besides having a yearly goal, we should also try to look at our long term plans such as retirement. When we have such term goals, we can always assure ourselves that we will have an adequate amount of savings to spend for the rest of our lives. Such savings can also work as an emergency fund, which we can rely on in case of some unknown future challenges..
13. Control Over The Online Expenses –
These days everything is online. We do our shopping online, order food online, book tickets online and so much more. These online networks attract a lot of customers, and we tend to overspend when we do things online. Instead of buying one apparel, we purchase three. Therefore, we need to have control when we try to buy something online. Best practice when we are buying things online is to buy things when a sale, offer or a considerable discount is going on.
14. Look for Joint Savings Opportunities –
We need to see if we have someone from our family or maybe our partner, with whom we can invest with our joint savings. Such practice always helps save more money, and most importantly helps us stick to the plan for budgeting.
15. Do It Yourself –
There are things such as cooking our lunch/dinner, doing our laundry and more, for which we depend on services from outside providers. If we have decided to stick to a savings plan, we need to do certain things ourselves rather than spending money to get it done. For instance, we buy food from our office cafeteria when we can cook it ourselves at our home; actions such as this save much more money when we analyse it at the end of the year. There are always multiple ways to budget, but the best way is to have a healthy and optimistic attitude about it, or else everything we plan will remain unpracticed.
If you find this article is helpful for your budgeting and savings plan, then let us know your opinion through providing your valuable feedback. It will be greatly appreciated!