One of the significant reasons for borrowers falling into a vicious circle of debts is they do not have enough savings to dip into. You often criticize high interest rates of loans as the bane of your financial condition, but your spending habits are also accountable for your disturbed financial life.
Whether or not you earn a large amount of money, building up savings is the first step to move toward financial security. Here are some suggestions to save money to meet unexpected expenses and stay within budget.
Steps to stay within budget
Spend less save more
You need to ameliorate your spending habits as soon as possible if you want to have savings built up early. Take a look at your monthly expenses and decide where you can whittle down. Replace expensive dinners with home-cooked meals. Choose a night in over an expensive evening out. Use a public transport instead of your own vehicle if possible. Do not use your car to cover very short distances. Why go out if you can entertain yourself at your own home? Stop going to theatres and cinemas at every weekend. However, you can go to movies on occasions. In the beginning, it may feel difficult to follow, but you will be encouraged to sustain your new habits as you find small savings adding up.
Make a budget and use cash
Now that you know, where you need to spend and where you should cut down on. The next step is to monitor your spending. Jot down everyday expense in your spreadsheet, and at the end of the month, track your outlays. Make all your purchases in cash to know the exact amount you saved at the end of the month.
The use of credit cards should be discouraged as long as you have money to buy anything. If you have come across an unexpected expenditure and you do not have savings to pay for that, the first priority should be given to credit cards over a loan. This option is better because you do not have to pay off interest. Make sure that you pay your bills within the given time and note it down in the spreadsheet.
According to studies, many borrowers face difficulty saving money because they yield to temptations such as shopping sprees, discount coupons, and the like. If you find a discount coupon to buy a pair of jeans, you should not immediately run after the deal. Think whether you need it or not. Do not block your money if you do not need it, and if you need it, examine whether it is the best offer or not. Sometimes sellers hike prices outrageously to provide discounts to attract borrowers. Be wary of such offers. Unnecessary blocking money in things that you do not need currently will ruin your savings.
Set aside a small chunk of your salary every month
Cutting down on expenses is not enough to build up your savings account. Target a small amount of money to set aside every month, for instance 10% or 20% of your total salary. The best way is to automate your savings. The set limit will be automatically debited from your salary account and credited to your savings account.
If you want to save more money, focus on manual savings too. Take out 10% of withdrawn amount and put it aside. It may be ambitious but in the end, you will see how little tweaks in your habits have built up your emergency cushion quickly.
Spend your holidays in your home country
Vacations are undoubtedly expensive; airfares, accommodation, and trips can burn a big hole in your pocket. Many people go abroad for vacations without realizing it will eat up their savings. Vacations are planned to break the monotony and that you can do even if you plan your trip in your home country. There must be several tourist spots in your home country that you have not explored, so why have a stay-cation?
Many people take out a holiday loan and plan their vacations either in their countries or abroad, but this is not worth it. Will you be able to enjoy with a burden of a debt? You do not have money to throw it at your vacation and you are taking out a loan; is it not a turn of the screw? Plan your trip only when you have enough savings.
Though banks and online lenders may finance your needs at once even if your credit history is bad, you need to set aside some money in savings. Loans prove to be very expensive for borrowers because of additional burden of interest payment. As long as you have savings, you should use it in case of emergency. Start saving money today. Make a plan and stay consistent with your spending.