We know that money management is an essential life skill. Most of us wish that we were taught more about how to create savings while in school. May be our adult lives would have been a tad bit less stressful that way. However, in today’s world, with the plethora of online resources that are available so easily, learning about this important aspect isn’t too difficult. In fact, the abundance of materials can sometimes confuse us instead.
But whatever the case may be, there is no doubt about the importance of being able to manage our personal finances properly. This includes the necessity of knowing how to create savings as well.
So today, let’s talk about some doable money management tips- savings in particular. The internet is full of such bits of wisdom. But I want to write about things that I personally follow and have benefitted from.
The Habit
At its very best, saving money is a habitual practice. I grew up in a culture where having savings is almost second nature to most people. Perhaps this is a practice that stemmed from necessity at one point and then people just kept on doing it. Nevertheless, as an adult, I see how great of a thing that is. Having something saved for a rainy day is an absolute necessity and we cannot deny that.
However, at the same time, I do know that this is not the case everywhere. What is the cultural norm in one place is sometimes a matter of choice in others. But that is where we go wrong. Something as crucial as saving money should not be an optional thing at all.
Tried and Tested Practices
There are umpteen tips for creating savings out there. Some are very doable while others apply to only a specific set of people. Here are some habits that I have practiced (some I still do) in my life and reaped benefits from.
Paying Off Debt
I cannot stress enough on the importance of this step. Debts are kind of unavoidable for the current generations. There is a reason why we see so much opinion on the debt situation that millennials face today. But here’s the thing- as long as we have debts to pay off, we will not be able to save as much as we would want to. Hence it is absolutely necessary to tackle our debts first.
There are several approaches to paying off your outstanding money. Many people swear by the method suggested by Dave Ramsey and it is indeed a brilliantly simple and effective solution, especially when you have more than one debt to pay off.
As for me, I started by paying off the maximum amount I could afford every month. And when I had enough money to foreclose my loan, I did that. The bank was not happy at all, no surprise there. I must mention that many a time I prioritized putting extra money towards my loan payment over buying things. While I was lucky enough to start with a considerably manageable sized loan, I made it a point to pay it off as fast as was possible in my circumstances.
To Buy or Not To Buy
This is almost a no-brainer but many times we forget it. Do not buy unnecessary stuff. Modern society pushes for consumerism. You are not trendy enough if you do not have the latest gadget or car or that branded bag. Every time the urge hits to spend some money, take a step back and ask yourself whether you really need this or not.
However, do not become unnecessarily stingy. While I do not condone buying things indiscriminately, I also believe that sometimes material possessions do bring us joy. The key here is to create a balance. Spend responsibly and within your means. This brings us to the next point.
Living Below Your Means
Perhaps one of the most brilliant ways to create a habit of saving is by living below your means. Having a well-controlled lifestyle is one of the keys to money management. This does not mean that you live like a pauper. Living below your means can be effectively achieved by not spending more money than you earn. That is the cornerstone of this lifestyle. It is completely up to the individual to carve out a routine that works for them.
Having a Financial Goal
One of the most important lessons that we, i.e my husband and I, learned when we embarked upon the journey of money management was that having a goal is crucial to the process. Obviously, this goal will depend on your aspirations and the future that you envision for yourself and/or your family. Knowing how much to save as a ballpark number will not only give you motivation but also make it easier to keep track of your progress.
Spend After Saving
When I had started my first job, I knew that I would be leaving in a couple of years to pursue higher education. And for that, I needed to save money. That was when I developed the habit of spending after I had saved my target amount from each paycheck. This is something that needs a lot of discipline and planning but is highly effective if you need to save up a chunk in a short time.
Firstly, you will need to figure out the mandatory expenses that you incur in a month. This will be any rent, money for food, transportation, etc. Then you will have to come up with the amount that you want to set aside every month (or paycheck). Whatever remains thereafter is for spending on non-essential items. However, before implementing this habit, it might be a good idea to have an emergency fund created for rainy days. That way, even if there is any unforeseen expenditure, you can avoid delving into your savings.
Being able to save money is sometimes a luxury.
Many of us do not realize this, but being able to set aside money from our earnings is almost a luxury in today’s world. With people living hand to mouth and earning minimum wages in urban locations, money management is tougher than ever. I personally never forget even for a moment that I am one of the lucky ones in this regard. Having said that, I also believe that circumstances change- through effort, perseverance and sometimes with luck. Tough times mostly do not last and it is imperative for everyone to know what they can do to be financially secure. Hence, understanding how to manage money and save appropriately is so crucial in our lives.
Peace.
Do you have any related experience or story to tell? Please share in the comments below. I would love to hear from you.
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