Money Saving Techniques
Financial wellness is a feat that every person aims to accomplish. Even though it can mean different things for every individual, everyone can agree that financial independence requires a good amount of savings.
However, how many times have you promised yourself that you’ll set more money aside only to fall short in the process? Saving may sound easy to do, but it’s actually a big challenge for many. With both your short- and long-term goals in mind, monthly bills, unforeseen expenses, other kinds of necessities may prevent you from acquiring a decent sum.
The good news is you can easily get through any financial bout by managing your money accordingly. One common mistake that people tend to make is that they don’t have a clear-cut method of setting cash aside. No matter how much money you’re earning, you won’t be able to save if you don’t budget your income accordingly.
Toning your spending down is just the first step, and if you aren’t able to track and manage the amount of cash for rent, emergency fund, and other maintenance expenses, you may get lost in the midst of it all. To help you get started, here are some of the best money saving techniques that you should try today.
Try to experiment with the different techniques listed below until you discover the best method for you. To learn more about the mentioned money saving techniques, take a look at the info-graphic below.
The 52-week challenge is a popular saving technique that started as a social media trend. Due to its effectivity, people have developed multiple variations of the method to suit their own income and circumstance. For this, all you need is a piggy bank and the willpower to stay committed for an entire year.
This method is pretty straightforward—all you need is to set aside a certain amount of money weekly. If you decide to save in increments of P20, that amount becomes your starting point. Once week 2 arrives, you need to set aside P40. This goes on until the final week of the year.
The 50/30/20 Rule
Anything critical for your survival such as food, water, and shelter are needs, and costly expenses such as your Netflix subscription and daily Starbucks drinks are wants. If you have a net income of P25,000, you have a budget of P12,500 for your wants, P7,500 for your needs, and P5,000 for your savings.
The Envelope Budget System
The envelope budget system is an old-fashioned method of organizing your budget. All you need to do is acquire multiple envelopes and label them for a specific purpose. Once your monthly income has arrived, you must allocate a certain amount to every single one and schedule a cut-off and reimbursement period.
Other than helping you see exactly just how much money you have left for every expense, this technique also teaches you the value of discipline. Since you’re not supposed to use the money from food to pay for electricity, this method will prevent you from spending unnecessarily.
If you have some leftover cash from the past cycle, you can keep the money in the same envelope or move it to another one.
The 6-Month Emergency Fund Rule
Financial experts recommend having an emergency fund that’s as big as 3–6 months of your income. This way, in case of a medical emergency, career change, or any unexpected occurrence comes your way, you won’t have to rely on bank loans and credit cards to ease your situation.
In the process of budgeting your income, you need to include your emergency fund. Instead of just letting your money sit in the bank, you can increase your savings with low-risk investments. Time deposit accounts or money market funds are safe options that will allow you to earn interest.
The 80/20 Rule
The 80/20 rule is a variation of the 50/30/20 rule. Instead of dividing your income into three parts, 80% of your income will be used for all your expenses, and the remaining 20% will be set aside for your savings.
This will give you more freedom and flexibility with your expenses and make it easier for you to track your budget. As long as you keep your expenses within 80% of your income, you’re making progress.
Take bigger strides towards financial wellness. Generating multiple streams of income will definitely help you achieve your goals. But before you read any guide to investing, you’ll need to learn how to manage your finances first.
Just like any other major milestone in your life, it will take some time before you actually hit your savings goals. The key to financial success is for you to stay patient, committed, and consistent. It may be a bit difficult at first, but practicing these methods, along with other money-saving habits over time, will allow you to become self-sufficient.