How to save

Video: The Fray - How to Save a Life (Official Video)

Content

Steps
Part 1 of 3: Responsibly Saving Money
Part 2 of 3: Cutting Costs
Part 3 of 3: Spend Your Money Smart
Tips
Warnings
Additional articles

Saving money is one of those tasks that is easier said than done. Everyone knows that saving is a smart decision, but not everyone can cope with this task. Savings are not limited to cutting costs, although even such a limitation is not given to everyone. It is wise for frugal people to not only plan how to spend the money they have, but also take steps to increase their income. So, in this article, we'll show you how to set realistic goals, keep track of spending, and get the best long-term benefits from your money.

Steps

Part 1 of 3: Responsibly Saving Money

1 Get in the habit of saving some of your money. The easiest way to save money is to deprive yourself of the opportunity to constantly spend money. Determining the amount of money that goes straight from each paycheck to your savings or retirement account saves you the hassle of deciding how much money to keep for yourself each month. In fact, you automatically save money every month, and you can spend the rest at your pleasure.Over time, even a small portion of your salary that goes into a savings account can go up (especially when you factor in the interest paid), so start doing this as early as possible to get the maximum benefit.
- To set up automatic top-ups, talk to the payroll accountant at your job (or the payroll company). If you can provide details for a savings account other than your checking account, you should have no problem arranging automatic replenishment.
- If for some reason you are unable to arrange an automatic deposit replenishment from each salary (for example, you are a freelancer or only receive a cash salary), determine the amount of cash that you will manually deposit into your savings account each month and stick to your plan.
2 Try not to run into new debt. Of course, it is not always possible to avoid debt and loans. Only a few people have enough money to, for example, buy a house or a car right away, while most people can buy real estate only on credit and pay it back slowly. However, if it is possible to avoid a loan, avoid it. Paying off the entire amount of money at once is always cheaper in the long run than paying off a loan in parts, because interest on the loan accumulates over time.
- If you can't avoid a loan, try to make the first installment as large as possible. The more of the cost you cover in the first installment, the faster you pay off the loan, respectively, the less you will spend on interest payments.
- While everyone's financial situation is different, most banks are of the opinion that loan repayments should be about 10% of your pre-tax income. Moreover, anything below 20% is considered a normal situation. Approximately 36% of income is considered the upper limit of reasonable credit payments.
3 Make a plan to save money. It is much easier to save money if you know what you are saving on. Set achievable goals to motivate yourself to make the tough financial decisions you need to responsibly save money. Some big goals (like buying a house or retiring) can only be achieved after a few years. In these cases, it is important to regularly monitor your progress. Try to look at the situation from the outside - this will help you understand how much of the path you have already passed, and how much is still left to achieve the goal.
- Bigger goals (for example, creating sufficient retirement savings) take a long time to achieve. During this time, the situation in the financial market is likely to change. Before setting a goal, take the time to research the future state of the market. For example, if you are young and just starting to make money, many financial analysts estimate that you will need roughly 60-85% of your current annual income to maintain your post-retirement lifestyle.
4 Set a time frame for your goals. By setting an ambitious (but achievable) time frame to achieve your goals, you create powerful motivation for yourself. Let's say you set a goal to buy yourself a house in two years. In this case, you need to familiarize yourself with the average cost of houses in the area in which you want to live, and also start collecting money for the down payment for your new home (usually the down payment should be at least 20% of the value of the house).
- For example, if houses in the desired area cost about 3,000,000 rubles each, you need to have 3,000,000 x 20% = 600,000 rubles on hand in two years. Whether or not this goal is achievable depends on your income.
- Setting a time frame is especially important for necessary short-term goals.For example, if you need to replace the gearbox in your car, you should raise money as soon as possible so that you do not find yourself in a situation where you have nothing to get to work. Setting a time frame will help you achieve this goal.
5 Make a budget plan. It's easy to settle for ambitious money-saving goals, but if you're not used to keeping track of spending, you're unlikely to be able to achieve those goals. To accomplish this, try to distribute your income at the beginning of each month. Distribute the amount of money that can be spent on each category of expenses. Thus, you will have an idea in advance where and how much money you will have to spend this month. This will likely keep you from wasting your money.
- For example, with an income of 35,000 rubles per month, the budget might look like this:
  - Housing rent / utilities: 10,000 rubles.
    Loan payments: 3,000 rubles.
    Food: 10,000 rubles.
    Internet: 700 rubles.
    Gasoline: 1,500 rubles.
    Savings: 5,000 rubles.
    Miscellaneous: 2,000 rubles.
    Excess: 2 800 rubles.
6 Write down your expenses. Expense tracking is a must when saving money, but if you don't record your expenses, you’re unlikely to understand why you’re struggling to meet your budget. Accounting for the amount of expenses for different types of expenses each month will help you identify "problem" areas and adjust your expenses in accordance with the budget. However, when tracking where the money is going, it is worth paying attention to every detail. Undoubtedly, you will take into account the costs of large purchases or loan payments, but do not neglect the small costs, because they "eat up" most of our money.
- For this purpose, it is convenient to always carry a notebook with you. Get in the habit of writing down all expenses and keeping receipts (especially for large purchases). At the end of the working day or at other free time, do not be lazy to transfer expense records to a notebook or spreadsheet on your computer.
- By the way, now there are many programs for tracking expenses that can be installed on the phone (some of them are free).
- If you have serious spending problems, feel free to keep every check or invoice. At the end of the month, divide the receipts into categories and calculate the expense for each one. You will be surprised how much money you spend on unnecessary little things.
7 Double check all amounts. Always ask for a receipt and check it, and print a confirmation when shopping online. Check to see if you have been charged more than you owe and if the check includes items you did not buy: you would be surprised to know how often this happens.
- For example, in a bar you order a cocktail with the whole company; make sure that they are not all credited to your account - let everyone pay for himself. If friends say that they will pay you another time, it can become a habit and lead you into a financial hole, and a very deep one.
- At a restaurant, divide the bill after the fact, not in half. If you ordered a dish three times cheaper than what your friend ordered, you don't need to pay half of the bill.
- If you have a hard time calculating in your head, feel free to use the calculator on your phone.
8 Start saving today. Money in savings accounts usually accumulates interest at fixed rates. The longer your money is in savings accounts, the more interest you get. Therefore, it is in your best interest to start saving as early as possible. Even if you are twenty years old and you can save a very small amount - do it. Relatively small amounts left in long-term interest accounts can exceed their initial value by several times.
- Let's imagine that you are twenty, you work in a low-paid job and have already managed to save 100,000 rubles. You put this money into an account with a payment of 4% per annum. After 5 years, you received 21,665 rubles as interest.However, if you had deposited this money into your account a year earlier, you would have received about 5,000 rubles more without any additional effort - a small but nice bonus.
9 Consider depositing money into a retirement account. In those years when you are young, energetic and healthy, retirement seems so far away that you shouldn't even think about it. But as the years go by, over time you get older. There will come a time when retirement is all you can think of. Unless you are one of those lucky ones who are fortunate enough to inherit a fortune from their relatives, saving money for retirement needs to be considered immediately after you start your career, and the sooner the better. As noted above, although everyone has their own life situation, it is wise to plan to have about 60-85% of your annual income on hand each year to maintain your standard lifestyle beyond retirement.
- If you haven't already, talk to your employer about transferring funds to a retirement account. These retirement accounts allow you to automatically set aside a specific amount from each paycheck, making it easier to save money. In addition to this, money set aside in a retirement account is often taxed differently from the rest of your paycheck. In addition, many employers offer special conditions for matching their retirement accounts, which means that your payments will correspond to a certain percentage of your salary.
- Keep in mind that the pension system in Russia does not always behave predictably and your funds may be “frozen”. It might be worth considering an alternative reserve for the future (a stable currency deposit, buying an apartment that you can rent out, etc.). Also be wary of non-government funds that offer too much profitable terms.
10 Invest with caution in the stock market. If you've been saving well and have a little extra money to spare, investing in the stock market can be a profitable (but risky) opportunity to make some more money. Before investing in stocks, it is important to understand that any money invested in the stock market can be lost forever, especially if you do not understand what you are doing, so you should not use such investing as a way to save money long-term. Treat the stock market like a calculable gamble with money that you are willing to lose. In most cases, people don't have to gamble in the stock market to set aside enough funds for retirement.
- For more information on how to make smart stock buying decisions, see our articles on investing in the stock market.
11 Do not despair. It's easy to lose patience when faced with procrastination and saving money. Your situation may look hopeless, sometimes it is nearly impossible to save enough money to achieve your long-term goals. However, despite the scanty amount at the beginning, there is always an opportunity to start saving money. The sooner you start, the sooner you will be on the right track to your financial independence.
- If you are desperate about your financial situation, consider consulting with a financial professional. There are agencies in which, for a small cost, they will help you analyze your financial situation and start saving.

Part 2 of 3: Cutting Costs

1 Try to cut back on spending on entertainment and other frills. If you are having trouble saving money, this is the smart place to start. Many of the costs that we consider acceptable are far from necessary. Avoiding frills is the first step to improving your financial situation, as it will not significantly affect your quality of life or your ability to work.It may be difficult at first to imagine your life without a voracious car or a cable TV subscription, but over time you will be surprised how easy it is to give up these things once you take them out of your life. Here are some easy ways to help you keep your excess costs down:
- Unsubscribe from additional TV and Internet services.
- Find a more economical mobile phone plan.
- Swap an expensive car for an economical and inexpensive car to maintain.
- Sell idle electronic gadgets.
- Buy clothes and household items in economy class stores.
2 Find more humble accommodation. For most people, the cost of living is the only major expense in the budget. Therefore, saving money on housing can free up a significant portion of your income for other important purposes, such as retirement savings. Of course, it is not so easy to give up your old housing, but if you are barely making ends meet, you should still heed this advice.
- If you are renting your home, you might want to talk to your landlord about lowering your rent. Since most landlords want to avoid the risks of finding new tenants, you may be able to get a great deal, especially if you have a good relationship with your landlord. If necessary, you can do housework (such as gardening or minor repairs) in exchange for cheaper rent.
- If you are paying off your mortgage, talk to your lender about the terms and conditions for refinancing your loan. If you have a reason, you may be provided with better terms. When refinancing, try to choose the shortest payment schedule possible.
- Perhaps you should consider buying or renting a home in a cheaper area. Look online for the average cost of housing in the surrounding areas.
3 Reduce food costs. Most people spend more money on food than they need to. As you forget about frugality while enjoying a gourmet meal in your favorite restaurant, your budget gradually dries up. Buying groceries in bulk is usually cheaper than buying individual ready-made meals. If you notice that you are spending a lot of money on food, you should slightly change your habits and start shopping in bulk in supermarkets. Remember that buying a separate meal in a restaurant or cafe is the most expensive option of all, so learn some simple meals that you can cook at home using cheap ingredients. This will save you a lot of money.
- Choose an inexpensive and filling meal. Instead of shopping for convenience foods, try fresh produce from a local deli. You will be surprised at how cheap it is to eat healthy food! For example, brown rice - a complete healthy food - can be sold in large 8-kilogram bags for less than RUB 100 per kilogram.
- Take advantage of discounts. Most grocery stores (especially large chains) offer coupons and discounts at the checkout. Don't let them disappear!
- If you frequent catering establishments, stop. It is much cheaper to cook dinner at home than to order the same dish in a cafe. In addition, the ability to cook even completely simple dishes is a pretty useful skill with which you can please friends, family, or even attract your potential soul mate.
- Do not hesitate to buy groceries in economy stores. And if you're in a crisis, don't neglect sources of free or cheap food. Bunkhouses, help and heating points can provide food to those in need. Contact Social Services for more information if you need help.
4 Reduce your electricity consumption. Many people don't pay much attention to the monthly payment of their utility bills.In fact, it is possible to significantly reduce your electricity consumption (and, accordingly, your total bill) with just a couple of simple steps. These tricks are so simple that it makes little sense to skip them if you're looking for ways to save money. Plus, by reducing your electricity consumption, you minimize your impact on the environment and reduce pollution.
- Turn off the lights when you are not around. There is no reason to leave the light on if you are not in the room (or house), so turn off the light when you leave. Try leaving a note on your front door if you find it hard to get used to.
- If not necessary, do not overuse an air conditioner or heater. To cool the air in hot weather, open windows or turn on a small fan. To keep warm, wear warm clothes, wrap yourself in a blanket, or grab a heating pad.
- Invest in good insulation. If you can't afford to pay for a major home remodel project, replacing old leaking wall insulation with high-performance modern insulation can save you money in the long run by keeping warm or cold air inside.
- In some regions, it may be appropriate to purchase solar panels. Solar panels solve many problems, so they will soon be much more popular than they are today. Although the initial cost will be high, solar technology is getting cheaper every year.
5 Use cheaper means of transportation. The car itself and its maintenance consume most of our income. Depending on how much you drive, gasoline can cost you thousands of rubles a month. In addition, you will have to spend money on maintenance and transport fees. If you decide to save money on more useful purchases, switch to public transport or even free vehicles. This step is not only a way to save money, but also to devote some time to exercise. It may even help reduce the stress of daily traffic jams.
- Inquire about public transportation near you. Depending on where you live, there may be several inexpensive public transport options at your disposal. Almost all major cities have metro or city train lines, while smaller towns have a bus or tram system that you can use.
- Consider walking or cycling to work. If you live near your place of work, you have a great opportunity to get to work for free, breathing fresh air and playing sports at the same time.
- If traveling by car is unavoidable, consider driving together. This allows you to share gas and maintenance costs with your fellow travelers. In addition, you will acquire interesting conversationalists.
6 Give preference to inexpensive (or completely free) entertainment. While cutting down on your personal spending can cut a lot of frills out of your life, that doesn't mean you should stop playing if you're trying to save money. Changing your usual activities to more accessible ones will allow you to strike a balance between fun and necessity. You will be surprised how interesting you can have fun for only 100-200 rubles, if you are creative!
- Follow public events. Now you can learn about major city events online on the Internet or from the news. Very often, it is inexpensive or free to attend events organized by local authorities or community organizations. For example, in some small towns, you can attend free art exhibitions, watch movies in a local park, and take part in charity rallies.
- Read on.Compared to going to the cinema and playing video games, books are cheap and very interesting entertainment (especially if you buy them from a second-hand bookseller). Good books can be incredibly addictive, allowing you to see life through the eyes of amazing characters or learn about new things that you would never have known about otherwise.
- Enjoy low-cost entertainment with your friends. Trust me, there are plenty of cheap and free entertainment and fun activities to do with your friends. For example, you can go camping, play a board game, watch a movie at a festival or at home, take a walk in interesting places, play sports games.
7 Get rid of the habits that cost you dearly. Certain habits regularly consume a large chunk of our budget. Over time, they can become bad habits that cannot be eliminated without help. Even worse, many of these habits can become very dangerous for your health in the future. Rid your wallet and body of the troubles associated with them.
- As corny as it sounds, quit smoking. The harm of smoking is known all over the world. Lung cancer, heart disease, stroke and many other serious illnesses await over time everyone who has not coped with this bad habit. If diseases do not bother you, it is also interesting to note that one pack of cigarettes (depending on the region where you live) can take up to 400 rubles.
- Don't overuse alcohol. A glass or two drunk at a party with friends will not do much harm to your wallet and body, but the constant excessive consumption of alcohol will lead to serious problems. These include liver disease, hyperexcitability, weight gain, delirium tremens, and in some cases even death. Alcohol also takes a lot of money.
- Don't indulge in psychotropic substances. Firstly, the consumption and distribution of drugs is illegal and punishable by law, and secondly, many drugs (for example, heroin, cocaine and methamphetamine) are quickly addictive and can cause a complex of very harmful (and even fatal) consequences for your body ... Of course, it goes without saying that they will cost much more than tobacco and alcohol. For example, country musician Waylon Jennings admitted that at some point he spent more than $ 1,500 a day on his cocaine addiction.
- If you need help overcoming your addiction, do not hesitate to seek professional advice.

Part 3 of 3: Spend Your Money Smart

1 Prioritize. First and foremost, only spend money on absolutely essential things. Be guided by the fact that part of the cost should go to groceries, housing and basic necessities. Naturally, if you've lost your home and are suffering from hunger, prioritizing is not easy. Therefore, you always need to have some small amount of money "for a rainy day" to cover the basic costs and only then distribute the money for something else.
- However, despite the need to spend on housing and groceries, you shouldn't spend more on them than you need to. For example, as mentioned above, trying to switch from eating out in cafes and restaurants to eating homemade food is one of the easiest ways to significantly reduce your food costs. Likewise, moving to an area with cheap rentals or cheap homes is a great way to spend less on your accommodation.
- Depending on where you live, housing can cost you a lot of money. Many experts advise against spending more than one third of your income on living.
2 Start saving money for a rainy day.If you still do not have a reserve fund with enough money to cover basic expenses in case of major financial problems (for example, if you suddenly lose a source of income),start procrastinating immediately. Having enough money set aside in a safe savings account will give you the peace of mind to get things done if you lose your job. Once you have allocated your main expenses, set aside some of your income for a rainy day in order to accumulate an amount sufficient to at least partially cover your expenses within 3-6 months.
- Please be aware that the amount of expenses may vary depending on your financial condition and residence. Despite the fact that in small towns it is possible to live on 15,000 rubles a month, in Moscow this amount will not even be enough to cover the rent of an apartment. If you live in an expensive area, then your "rainy day" savings should be higher.
- The stash gives you a sense of confidence and peace of mind in the event of career difficulties. Plus, having a contingency fund can also make money for you. If you don’t have such a fund and you lose your job, you may have to accept the first job offer you come across, even if it doesn’t suit you. On the other hand, if you can live without a job for a while, you can afford to be finicky and get better jobs.
3 Pay your debts. Debt left unattended can seriously ruin your money-saving plans. If you make the minimum loan payments, you will pay much more as a result for the entire period of using the loan. Save money by allocating the majority of your income to pay off the loan to get rid of it as quickly as possible. Partial loan repayments are usually the best use for your money.
- Once you have paid all the necessary expenses and created a good reserve fund, you can safely spend almost all of your additional income on loan repayment. On the other hand, if you do not have a reserve fund, you should split the additional income so that you repay the loan monthly and at the same time replenish the reserve fund.
- If you have multiple loans, consider combining them into one at a lower rate. It is important to keep in mind that the repayment schedule for this loan may be longer than the original one.
- If you have compelling reasons, you can talk with the lender about the possibility of changing to a lower interest rate. Your bankruptcy is not profitable for the lender, so you may be able to find a solution.
- More information can be found in the article "Getting Out of Debt".
4 Then set aside your money. If you have already raised your reserve fund and paid off all (or almost all) of your loans, you may want to deposit money into a savings account. The money saved this way is different from your reserve fund. The reserve fund should not be touched unless absolutely necessary. A savings account is for large purchases, such as repairing the car you drive to work. However, if you limit the spending of the money saved, the amount will grow over time. If you can, experts recommend putting at least 10-15% of your monthly income into a savings account.
- When receiving a salary, it is quite difficult to refuse the opportunity to make a purchase. To avoid this, save money in a savings account as soon as you receive your paycheck. For example, if you are saving 10% of your salary, which this month came out to about 7,100 rubles, immediately set aside that 10% interest (the amount can be found by simply removing one zero), which is 710 rubles. Thus, you can avoid unnecessary expenses and accumulate a rather large amount of money over time.
- An even better idea is to automate the accumulation process as much as possible, so you won't even be tempted to spend money. Talk to your employer about setting up an automatic deposit transfer through your bank or other applications.This way, you can transfer a set portion of each paycheck to your savings account without any extra effort.
5 Now spend on the right things. If you have some extra money left after you set aside a certain amount of monthly income in a savings account, you should consider buying the right things that can increase your productivity, work potential, and quality of life. While such purchases are less necessary than food and living expenses, they are not easy to do without in the modern world.
- For example, buying a comfortable work chair so that your back does not get numb during work is not an absolute necessity, but it is a smart choice, since it allows you to improve working conditions, as well as keep your back healthy (by the way, a lot of money is spent on back treatment, if the case is running). Another example is replacing an old water boiler. Today it suits you quite well, but, perhaps, soon you will have to spend money on its repair, in which case, it is very convenient to already have a new boiler on hand.
- Other examples include purchases that make it easier for you to get to work (such as public transport passes). As well as purchases that allow you to work more efficiently (for example, a hands-free headset for your phone) and purchases that you need to maintain your health (for example, orthopedic gel insoles for shoes).
6 Excess should be the last category of expense. Of course, by saving money, you don't have to deprive yourself of all the fun and enjoyment. After you have deposited money for a loan, postponed a little "for a rainy day", spent on purchases that will come in handy in the future, it is quite normal to spend a little money on yourself. Responsibly spending money on excess is all about hard work and analysis, so don't be afraid to celebrate getting your finances in order with smart shopping.
- The category of "excess" includes goods and services that do not have a great need and benefit. For example, this category includes trips to expensive restaurants and cafes, vacation trips, a new car and expensive clothes, cable TV, expensive gadgets, and much more.

Tips

If you have some money at your disposal, put most of it in a savings account, but do not forget to set aside the planned amount for a rainy day. This will help you reach your savings goals faster.
If you want something VERY MUCH, ask yourself how MUCH do you need it? Most likely, you don't really need it.
Many people manage to save and save "at least something", despite the level of income. Even small savings develops the habit of wisely handling money. By putting aside just 150 rubles a month, you will learn to manage your budget smarter.
Always overestimate your expenses and underestimate your income.
Pay for purchases with cash and always keep receipts. Get in the habit of saving coins in your piggy bank. More often than not, we do not think that over time, even a small change saved and put in a piggy bank can grow into a significant amount. In many banks, you can exchange small change for paper money, if you already have a considerable amount of money. In addition, you are unlikely to be tempted to spend a small change from a piggy bank on some unnecessary purchase.
Take care of your belongings. This way, you don't have to constantly buy new things. Also, you should not replace things unless it is absolutely necessary. For example, if the motor in an electric toothbrush breaks down, this does not mean that it is no longer a toothbrush. Keep using it until you have the opportunity to buy a new one.
Every time you are about to buy something, think about the item you are saving for, as well as the percentage of your savings that the new purchase will cost. Chances are you will change your mind.
It is much easier to make a plan for spending money if you get about the same amount of money every month. But if you have a floating income, it will be more difficult to predict your expenses, since you do not know when you will be paid next time. Rewrite your budget categories in order of importance, and write the most important things first. Protect yourself - imagine it is longer than you expected until the next paycheck.
Use self-hypnosis. For example, repeat this phrase until it takes root in your mind: "I don't need a loan."
If you can't bring yourself to get rid of all your credit cards, at least freeze them. Place them in a container, fill them with water, and place them in the freezer. Thus, when you feel the need to use the map, you will have to wait for the ice to melt. During this time, you can change your mind and understand that in fact you do not need to buy what you were going to.
Do you have any hobbies? Include it in your cost category. One very important saving habit is equalizing costs with a savings account. If you have hobbies like airplane modeling, scrapbooking, extreme biking, or scuba diving, make it a rule of thumb that every time you allow yourself to spend on a hobby, you equalize the cost with a savings account. For example, if you bought a pair of bicycle gloves for 450 rubles, then you add another 450 rubles to your savings account.
Enjoy the simple pleasures of life. During the Great Depression, people also had fun, it was just other entertainment. Children rode homemade scooters, teenagers organized dance contests, everyone played Monopoly, solved puzzles, read and listened to the radio. Get together to discuss the news or pray, play poker or sew funny rag pillows, play musical instruments or dance. Of course, such activities require a little imagination and resourcefulness, but people were having fun and having fun, why don't you give it a try?
Try to find at least one coin on the ground every day. Start a separate jar for the found coins and see how quickly their number grows!
If you have the opportunity to share the things you have (from food to household items), try it. Hand washes hand, especially in the case of close friends. Soon enough, your friends will be doing the same!
Are you serious about saving money? Try to double your funds! These saving tips will not only help you save money quickly and regularly, but also show you the approximate value of your hobby and the rest of the purchases you make without even thinking!

Warnings

If you get confused, don't blame yourself. Next time, try to plan your budget wisely.
Don't just go shopping if you have money with you. You will only be tempted to spend money that you cannot afford to lose. Go to the store with a pre-made shopping list.
After a hard week at work, you might want to take a break by saying to yourself, "I've worked hard and deserve it." Remember that the things you buy are not a gift to yourself, they are an exchange of funds for goods. Tell yourself, “Of course I deserve it, but can I afford it? Even if I can't afford it, I still respect myself and deserve to fulfill my savings plans! "
Unless you are in a difficult financial situation (there are only a few hours left before you leave your home, and your three children are starving), you should not save on health.Basic preventive treatments for yourself, your family and animals can cost you 600 rubles per visit or 300 rubles for medications, but ignoring them can lead to more costly problems in the future.
If you have spenders in your circle of acquaintances, you need to make a list of excuses why you can't play with them all the time.