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It’s a new year, and you’ve probably made some resolutions that will help improve your life in many ways. For some, it’s weight loss, some want to increase their income and make more money while a few financially shrewd people want to save more.
The people in the last group are particularly smart because they know that even if you make a ton more money, it is still possible to struggle financially, no thanks to something called lifestyle creep.
If you want to avoid living above your means and have resolved to save more money as part of your new year resolutions, the tips you’ll learn here will definitely put you on the right path.
Start With a Lifestyle Audit
Like medical conditions, the first thing you need to do is determine where your money goes. In this case, that means doing a lifestyle audit to check and assess what you’re spending money on. And most importantly, see if they are important.
Remember, this is just a preliminary exercise where you’re just watching and tracking every expense. An easy way to do this is to put all your spending money on one or two cards and buy everything from there.
Then, at the end of the month, look at your expense statement(s). Then, determine what’s important and unimportant, and cut out the unimportant.
Start Budgeting
Once you’ve determined what’s important and necessary, do a tally of the costs and allocate that amount to an expense account or debit card. For example, if after your audit, you found that you spent about $600 a month on unimportant stuff, set up instruction with your bank determining where that $600 will go every month.
For instance, if you’re thinking of increasing your net worth, then that $600 can go towards savings for a real estate investment in the future. Have a monthly budget that’ll easily accommodate your necessities.
It won’t be easy living within that budget, but it’ll make you financially disciplined. If you’d like to have an idea of how much you should spend per month, use the 50/30/20 rule. That’s 50 percent of your income on needs, 30 percent on wants, and 20 percent on savings. Or something that’s more comfortable for you.
Put Away a Predetermined Percentage of Your Income Monthly
Here’s a simple trick that always works: set up instructions with the bank to deduct a certain percentage of your monthly income and send it to a savings account or one you can’t touch.
This way, you’ll know that you’re saving something decent every month. This auto-debit can help you save a lot of money if you use it correctly. More importantly, it can encourage you to increase your income if you find that what’s left is not enough for you to live on.
Consolidate Your Debts
The average adult has some debts –could be student loans or credit card debts. However, instead of paying the individual debt, work with a financial planner on consolidating your debts.
This way, you’ll only pay a lump sum which will be split between all your creditors. This will make your life so much easier, and ease the debt burden. Plus, it’ll free up some extra cash that you can save or invest.
This is such a nice post. Thanks for sharing this informative article with us. This guide helped me to learn some 4 easy ways to save money in 2022. Thanks a lot. Hope to hear more interesting and informative topics from you. Keep sharing like this. To want more helpful information, check out this blog, i hope it helps all.
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