How to Save Money? A 5-Step Guide

Do you ponder this question often? You plan to save but then after a few days, you see that you are left with no savings at all. This can happen and it happens to each one of us.

So, how to actually save money? This is a guide and you will have to treat it as important as any of your religious books if you want to save money.

Each one of us plans to have something which costs more than our monthly income and so we try to save for two to three months to get our hands on the thing that we want. 

But almost at the end of each month, you realize that you have spent all of your money and don’t even know what you did with it.

We can understand your problem, so read this article to learn practical ways of how to save money step by step.

Step 1- Set a goal

A journey where you don’t know the destination is kind of a wasted journey in which you don’t reach anywhere. Set a goal, that is you can set a short-term or long-term goal of buying a phone or car and saving for it. You can also set a long-term goal, wherein you plan to save for your retirement or to buy a house in the future.

Setting a goal is very important in saving money as it lets you calculate how much money you need to save every month to reach that goal and it also motivates you. You feel happy that when you will save the decided amount each month, then you will be able to buy your dream phone or house. This motivation will force you to work and also stay away from temporary temptations to spend money. You can also read money management tips to learn more about saving money or setting a goal.

Step 2- Be Aware

Suppose you are playing a match, let’s say a cricket match, and in it, if you are not aware of where the batsman is scoring his runs, then you won’t be able to devise a strategy to stop him. For example, if he is scoring on the leg side, then you know that to stop him you need to set a strong leg-side field. In the same way, if you are not aware of where each penny of yours is going then you wouldn’t be able to stop it.

Suppose you have decided to save money from this month, that is September, then do not right away start saving money. For the whole of September month, do not keep any amount aside to save, rather spend for the whole while being aware of each penny of yours, i.e. note down all your expenses for the month, they may be small or huge expenses. You can take the help of personal finance apps to track your money. At the end of the month overview all the expenses in the month and see where you can save.

Step 3- Create a Budget

Now that you are aware of your money and where it is going, you can plan a budget. Your salary may not be high and it might feel a bit dramatic to create your budget, but trust me this works wonders. In the previous step, you learned to be aware of your expenses, review those expenses and see which one you can curb.

You can plan your expenses in two different categories, i.e. Need and want. By reviewing your expenses, classify them into need and want. Needs are the essentials like groceries, rice, or bread, these are important to survive. Now go for the wants, calculate the expenses on your wants in the last month, and then exclude the amount that you want to save. After eliminating savings, if you want you can keep the leftover amount for your wants like for partying or for going out.

Step 4- Start

As simple as the headline, start. Starting is the most difficult thing. You plan to save, you write down your expenses and create a budget, but you do not take action. You just keep on delaying it by days or weeks. A plan without action is useless, so take action as soon as you plan.

Just start saving as soon as you create your budget, even if the saving is a small amount that you think won’t matter much in the long run.

Step 5- Stick to the first four steps

In short Discipline. Discipline yourself, and do not let your temptations get in the way of fulfilling your saving goals. Write the above steps down and follow them religiously.  Have good control over your temptations, they only can stop you from saving and nothing else. Also, do not be too adamant about savings that you forget to enjoy at all. It is one thing to save, but along with saving also invest some amount in living your life like maybe partying or going out with friends. Have a good balance between saving and spending. You can also consider investing in top stocks to multiply your wealth.

Following these five steps will start you off on a journey of saving where you will have a good balance between saving and spending. Start off today to not regret it later. Also, stay tuned to our blog and we shall provide more such valuable advice.