How to Save Money?

22.03.2022

One of the hardest things in every adult’s life is saving money. Life is full of surprises and most of the time we are not ready for them. But if you’ve saved money, you won’t be completely blindsided. Hopefully our step-by-step list can help you develop a simple and realistic strategy to start saving.

1. Record your expenses

Tiny or huge, it doesn’t matter. You should keep track of all your expenses. Because the first step to start saving money is figuring out how much you spend. You can create an Excel sheet or use an app.

2. Find ways you can cut your spending

Ok, so you’ve figured out how much you spend on groceries, dining out and other things. Now we need to lower it. For example, if you like to go out and spend unnecessarily, maybe you can switch to free or low-cost events to reduce entertainment spending. You should cancel any subscriptions and memberships that you don’t use anymore.

3. Budgeting

Once you have an idea of what you spend and what you can cut out every month, you can begin to organize a simple, workable budget. Limit your overspending by comparing your expenses with your income. Our recommendation is to create a savings category and aim to save 10-20% of your income.

4. 50/30/20 method

We recommend the 50/30/20 budget for smart money management. Devote 50% of your income to needs, 30% to wants, and 20% to savings. If you find one of your allocations exceeds these percentages, make some adjustments to fit the formula.

5. Goals

You can set short-term and long-term goals to save smarter. Think about what you want to save for – a new phone, a holiday, a car or a home. Short-term, 1-3 years savings are for your emergency fund, a vacation or a down-payment on a car. Long-term, 4+ years savings are for a down-payment on a home or a reconstruction project, your kid’s education and your retirement fund. A small achievable short-term goal like saving for a new smartphone can give you that psychological boost you need to keep on saving.

6. Choose your saving method

For short-term goals, consider using saving accounts or a deposit account which locks in your money for a fixed period of time at a certain rate. For long-term goals, consider opening an individual pension account or investment accounts. You don’t have to limit yourself to just one account. Look carefully at all your options and consider things like fees and interest rates.

7. Watch your saving grow

Review your budget every month to check your progress. It helps you to identify and fix problems quickly. Stick to your personal savings plans and hit your goals faster than ever.

You may not reach your saving goals overnight, but the key to cumulate huge savings is patience.

Anyone can be more financially responsible in a few simple steps. Tag your friends who could also benefit from some financial advice, and follow us on social media.