Simple tips to save your money in the coming year 2022.

Simple tips to save your money.

_{Do not save what is left after spending, but spend what is left after saving. – Warren Buffett}

save your money

SAVINGS from earnings is a highly tricky question for a common man. It depends on multiple factors. The income and expenditures vary from person to person. Rising inflation and market-driven prices make it difficult to control spending. Despite this, you can save some money by controlling your expenses.

Saving refers to that part of income that a person is left with, after the consumption. According to encyclopedia Britannica, “Saving is a process of setting aside a portion of current income for future use.” We can say saving is the surplus of income over consumption

Saving = Income – Consumption

2000 = 10000 – 8000

The first question that arises in the context of saving money is “How much money can we save from our salary”? The general rule of thumb would be to consider 50% 30% 20% ratio. In today’s time the expenses are extremely high due to inflation, it would be difficult to save money, Even a simple 70%20%10% rule to save from your salary will serve the purpose.

70% for living expenses

20% for lifestyle expenses

10% percent for saving

You can have control over your financial actions by adhering to few simple steps mentioned below:

Make a monthly and yearly budget plan

Budget preparation to control expenses with a Savings oriented approach

The intelligent analysis of your fixed and variable expenses will allow you to allocate expenditures in such a way that savings can be increased. The budget allocations will help you avoid overspending. Sticking to them becomes easy as unwanted items are already filtered out. Write down a list of all the expenses you expect to have during a month. Having a budget helps you manage your money and pay off your debt. Segregate your expenses in two categories: fixed and variable. Though fixed expenses are unchanged, working on variable expenses might yield some savings

FIXED EXPENSES :

• Rent payment
• Transport expenses
• grocery
• personal care
• Insurance
• Electricity bill
• Student loan
• Child education fees

After you have set up your budget, you must monitor and continue to track your expenses in each category ideally every day of the month. Use your previous bank statements, receipts. And credit card statements from the last three months to identify all your spending what you typically spend each month.

Calculate your net income

Your net income is what you are left with after all the bills are paid. You want this to be a positive number so you can put it toward your debt. saving. Or other financial goal. Calculate your net income by subtracting your expenses from your monthly income. Write down the number, even if it is negative.

If your net income is negative, it means the expenses have exceeded the income. This reflects the debt trap you might be moving in. You may end up compelled to use your credit cards, borrow money, or overdraft your account to make it through the month. Pay attention towards the movement- where the money is going? Variable expenses are typically the easiest places you can adjust spending.

Cut your expenses

• Eating out
• Reducing your phone bill
• Postponed the vacation this year

Evaluate your spending using a want vs. needs analysis. The wants should lie below the earnings.` The habit of managing money is much more important than the amount. credit cards also have advantages, but you cannot control it, so it is better that you stop using credit cards, impulsive buying /instant gratification lack of patience and financial discipline will always hurt you financially so if you have lack of patience and lack of financial discipline you will be easily trapped to buy things you don’t really need .

Ask question before spending/buying- do you really need to buy this thing? if your answer is yes, then you wait three days for it. Save fast, then spend often people save money after spending, do not do that save first then make a budget according to remaining money. You do not spend your money to show others, this is not good for your financial health. Somehow you think that what difference does it make, you should understand that drop by drop fills the pitcher, small saving can be of great benefit to you.

Set a short terms and long terms goals –

Your savings can be worthwhile only when goal is set for it. Short-term goals are your more immediate expenses you will spend money on within six months or years.

• Down payment   for car loan
• Credit card debt payment
• Holiday plan
• Emergency plan for 1to 3yeas
• Party expense (marriage anniversary and birthday anniversary
• Minor repairs and home improvements

Long -term goals may take 5 to 8 years or even decades to reach   long term goals require more attention and more money   than short term goals.

• Retirement fund
• Paying off a mortgage
• Wedding
• Down payment for buying house

Be careful you can never save the money with money management. If you manage your money well, you will get more of it, but if you mismanage your money you will lose it LEARN TO EARN WITH THE SAVINGS..