Most workers find it difficult to save and struggle to live from one paycheck to another. As living expenses are rising and because of health emergencies and job loss that can happen anytime, we are often advised to have a savings goal from our living expenses.
A recent survey carried out amongst Americans shows that only 71 percent have emergency savings, an all-time low in five years. Many people find it difficult to save. However, we are going to share some simple and effective ways to live frugally and save.
Set a budget for yourself and stick to it
It is essential that as a worker, you track all your expenses monthly. Gather all your bills as well as receipts of all purchases you made in that particular month. Categorize all these expenses into needs and wants. The costs of your needs are those fixed costs that you make every month. Example of such expenses is house rent, insurance, ongoing healthcare plan, and student loans, etc. Your wants, on the other hand, are those variable costs such as costs of food and clothing, electronics, phones, and hobbies, etc.
Create a budget at the end of the month
What is your net income at the end of the month? That is your income after tax. From there, deduct your fixed expenses from it. After the deduction, remove a percentage you would like to save at that particular month; most people save 10 percent of their net income. Calculate what remains from it.
At this stage, you will sit and think and ask yourself some serious questions. Is the remaining money enough for my wants, i.e., flexible expenses? How do I adjust my flexible expenses to make sure it is enough? Here, you will have to set priorities, take another look at you fixed costs and make the required adjustment.
Other useful ways to save money from your salary
Avoid making decisions based on impulse
As a worker, some choice requires deep thoughts before taking them. One of the significant purchases one can make as a salary earner is a house or car. There are others like the cost of appliances, furniture’s, and wears. Their significance varies from one individual to the other. Be mindful of your spending and think of how these purchases can affect your budget.
Reduce your monthly bills
There are some expenses or services either fixed or flexible that we should consider reducing their cost to have a healthy budget and be able to save. Example of such is a reduction in our energy consumption, reduction in our service levels, buying a more reliable car and refinancing our mortgage. Purchase electronic devices that consume low energy and be an overall responsible energy user. Some other productive steps we can take is to source for alternative insurance companies or internet providers that have a lower rate.
Earn additional income
Apart from our monthly earning, we should look inward on how we can make extra income. This is essential as it will augment our earning and allow us to save more for the future. Some example of ways we can earn additional revenue is to sell items we don’t want or need again.
There are an auction or small local e-commerce online stores where we can put items on sale (wears, furniture’s, electronics and so on). Another example of ways to earn additional income is to think of making your hobby as a side business. You can sell some of your crafts or babysit on weekends to earn extra.
We should all have financial control over our lives and live a responsible life by spending reasonably and saving for the future.