Savings are crucial. All financial experts say this, but many of you fail to have enough money stashed away for a rainy day. The ideal size of an emergency cushion is at least three-month worth of living expenses, not to mention the savings for planned expenses like car and mortgage go alongside.

It is hard to be sure about your financial situation. Everybody learnt this message from the pandemic. Even well-off people faced some complications.

“Whether you are living paycheque to paycheque or you are better-off, you must stow away money.”

“When you have savings to fall back on, you will be able to meet unforeseen expenses without any hassle.” It may take time and make you feel it is hard to do so, but if you stick to your plan or goal, you will undoubtedly be able to have some money set aside.

“The key to saving money is consistently paying yourself first as soon as you receive your paycheque.” In fact, people living from paycheque to paycheque can also be put by money. Little savings are always better than zero savings.

Ways to be a specialist on saving money

Here are the tips that will help you become an expert at saving money:

  • Set a saving goal

First off, you need to set a saving goal – how much you want to save each month. You cannot choose a random figure to pull money from your pay account as it depends on your income and expenses. For instance, people living paycheque to paycheque cannot save 10% of their monthly income.

  • Take your bank statement and see how much you spend every month.
  • Categorise your expenses so you know how much money is going out into inessential expenses.
  • Try to cut back on them so you can transfer that money to your savings account.
  • Stick to the amount you choose to stash away every month.

“If you are earning a good amount of money, you should try to lay aside at least 10% of your income. Try to whittle down your expenses so you can have wiggle room in your budget for saving money.”

  • Treat savings as a fixed expense

Budgeting is a must to ensure that you do not overspend money. If you cannot do it manually due to any reason, you should use budgeting apps. “Various budgeting apps are out there that can help you with budgeting, saving and investing money.”

Every month create a budget that works for you. “As you include expenses like food, rent, and utility bills in your budget, you should add in savings as well.” Treat it as a fixed expense, like your rent. You must pay for it yourself. After keeping aside money for savings, try to cover all of your expenses from what you are left with.

If it does not seem to be possible, try to fine-tune your budget. Slashing your discretionary expenses will make it work for you.

  • Do not keep it at home

Keeping your savings at home is the biggest mistake. This will make you tempted to dip into funds even if you do not need them. Therefore, it is recommended that you should open a savings account. Try to keep your money in there.

However, banks provide different kinds of savings accounts with varying interest rates. Choose a savings account that provides you with an attractive interest rate. Make sure that you can access money easily. Try to take advantage of your relationship with the bank to get attractive interest rates.

Savings accounts require you to maintain a minimum account balance. Make sure that you choose the one that has the lowest limit.

  • Find ways to cut expenses

“Even if your budget allows you to put aside some of your money, it does not mean that you do not need to revise your spending.”

  • Look at your bank statement for a detailed view of your monthly expenses.
  • Then, you should divide your expenses into fixed, variable and discretionary categories.
  • Fixed expenses will remain the same, but you can make adjustments with variable expenses and discretionary expenses.

It is not necessary to bring down your inessential expenses to nil, but you should try to cut back on them. Lowering your inessential expenses will release more cash for your savings. As far as it is about cutting down on variable expenses, you should ensure you do not waste.

Here are the ways to cut back on expenses:

  • Do not buy groceries in bulk if you cannot use before their expiry days.
  • Prepare meals at home. They are more affordable than takeaways and dine-out.
  • Avoid stocking up on perishable goods.
  • Buy groceries from thrift stores.
  • Take advantage of buying in bulk. Make sure they will not go off before you use them up.
  • Look for cheaper car insurance. Keep your car in a good condition to get premium discounts.
  • Compare your phone bill and broadband plans and switch to a more affordable deal.

Slashing expenses will always increase the size of your savings.

  • Pay off debts

Debts eat up your income. Whether you have quick loans , they will cause a burden on your pocket. To improve your savings, you should try to pay off your debts first. If you need any assistance, you can consult a debt advisor. Debt management companies can also help you settle your dues faster.

If you are to borrow money, make sure you do not fall behind on payments. Only when you are sure about your affordability should you borrow money.

The bottom line

“Saving money can be difficult, but it is not impossible at all.” You just need to get hold of your finances. “Understand how much money you earn and how much you spend.” Cut back on your spending so you can build some savings. Set a plan and stick to it. You will see your savings quickly growing.