Getting smart about money is an excellent idea if you intend to reach your financial goals successfully. We have bundled for you a few things you can start doing today to get smart about savings.
1. Have a Strong Reason for Your Savings
Having a highly motivating reason you are saving and making other financial decisions helps you stay the course. A good example would be saving up to travel, start a business or even take that degree you’ve been dreaming of. Once you set your mind on one thing, you will be more likely to stay committed to your saving goals.
2. Get Organized
Getting your finances organized can be challenging. It involves you taking stock of all your income streams. Then listing down your expenses and keeping track of daily expenses. The good news is that there are applications that are designed to help you track your finances. Getting your money organized will let you know how much you can spare and put up in savings. We should probably warn you that it can be brutal, but the results are worth it.
3. Know Exactly Where Your Money Goes
Part of getting your finances organized involves knowing where your money is being used. There are applications designed to help you track how you spend your money. These apps are even designed to categorize your purchases from necessary to unnecessary spending so you can adjust your spending habits.
Once you know where you spend your money, you can decide on how to cut down expenses. The extra savings will help you achieve your goals faster.
4. Shop Smarter
We cannot stress this enough—Impulsive buying is the fastest way to kill your savings. To curb impulsive buying, you should always write a shopping list before you go to the store. Stick to the list and only make adjustments if it saves you money. Take advantage of discounted products. If you are shopping for a family, then make sure that everyone gets what they need at once so you can get discounts for bulk buying.
5. Work On Your Debt First
Before you start saving up for your dreams, you should pay off your debt first. Paying off your debt will free up more of your finances to focus on your savings. More importantly, this will ensure that you are done with all interests at hand.
6. Build a Strong Credit Report
What do your friends know about your debt-paying habits? Do you pay back on time, or do you have to be reminded to payback? Every time you borrow money, make a habit of paying on time. A good credit report will afford you better terms on loans and even mortgages. A good credit report even makes it easier to receive credit.
7. Don’t Forget to Save Up for Your Future
You will not be working forever. You need to save up for when you retire. Saving up is not easy. It is essential to securing a better future for yourself. One of the best ways to start saving is to pay yourself first. The best way to save up consistently is to inform the bank to take the money you want to be saved and deposit it into a savings account before it gets to your accounts.
If you are lucky to get a raise at work or tax returns, you can also put them into your savings account. It would be best if you only did this after paying off your debts.
8. Set Your Financial Goals
So how would you know how much work needs to go into your financial projects? You do so by setting financial goals. Writing down your goals increases your chances of actually realizing them. If your long term goals look a little bit intimidating, you can break them down into smaller short term goals. You can even have medium-term goals.
Remember that the key to setting smart goals is by setting goals that are specific, measurable, Achievable, Realistic and time-bound. Your goals should also be listed by order of priority. Which goals are most important to you? Work on these goals first and only compromise on the others.
9. Spending Plans
Since writing down goals can help you achieve them, jotting down your spending plan will also help you save some cash. A spending plan is one of the best ways to make sure your daily spending habits do not overrun your end goals. A spending plan will make sure that you stick to your monthly budget. It will help you control your financial future and reach your goals.
10. Invest and Grow Your Money
Most people wish they knew this sooner. Letting money sit in the bank does you more harm than good. Investing your money will ensure that it keeps growing in value instead of depreciating with inflation.
Have you heard of investment vehicles? You can easily invest your money to multiply in assets like bonds, mutual funds, real estate, capital markets, or stocks. Any kind of investment is generally riskier than saving in a saving account. Standard investment vehicles include:
• Mutual Funds
Mutual funds allow you to invest any amount of money into a fund that a trusted fund manager then appropriates. Mutual funds allow members to diversify their investments irrespective of the amount of money they have at hand.
• Treasury Securities
These include federal government bills, notes and bonds. As long as you hold the security to maturity, you will be guaranteed interest payments. However, if you choose to sell your security, you will lose money.
Stocks are the most popular method of investing. They allow you to own a piece of a company. Investors buy stocks and hope that the stocks increase in value, in which case a profit is made. To reduce the risk, you should have stocks in different companies, all in other sectors preferably.
Companies and the government issue bonds; when you buy a bond, you lend money to the issuer. The issuer then pledges to pay back the money in a specified amount of time with interest.
Smart saving is a multifaceted endeavor. It requires your undivided attention and commitment. Follow these tips for a better, and more secure financial future.