Earning a big money is not the only thing which will help you to reach your goal of retiring early & rich, having an own house, own car and so on. In fact if you are not really careful, what ever money you get can be drained in your daily spending. A big bonus at the end of the year or a hike is not going to help if you are not taking all measures to save that money for a better cause.
Below are few points you might need to look into to save hard earned money.
- Set a Goal: Set a long term financial goal like buying a house or car or so. Unless you have a financial goal it is very difficult to convince the mind to restrict spending. Setting up a goal actually gives you a reason to save. Believe me, this is one of the most important thing you should do before even start thinking about saving.
- Restrict or avoid the use of credit cards: When we don’t pay physical money, we think as if we are not spending money. Try to minimize spending on credit cards. Choose a card wisely. This is too risky to take a card which got annual charges and other hidden charges. My experience says, it is very easy to open a credit card account with annual charges, but very difficult to close it. Choose a card which actually gives back monetary benefits if at all you wish to have one.
- Strictly follow a budget: Budgeting your monthly expenses and strictly adhering to it helps a lot in saving money. To create a budget at first monitor your monthly expenses for few months(generally 3 months should be sufficient). Write down each and every expenses on a daily basis. Average out 3 months data to come up with a near perfect budget. Allocate that much amount to your monthly expenditure and stick to it till the end of the month. This is one of the best strategy to save money.
- Don’t keep cash handy: It is too risky to keep money at your disposal if you are planning to save. When there is option human nature is to use it. Root out the option of spending from the beginning itself. Transfer your money to some of your account from where it is difficult to withdraw money. For example you can put your idle money in fixed deposit scheme so that your money will be blocked for a particular period. Do this every now and then when ever you get money.
By telling saving money we are not speaking about living poor. This is a bad idea to live like a poor if you have money. Life is too precious and short. For the sake of saving money don’t restrict yourself to everything. We are just telling spend less frequently and and save judiciously.