How to Save Money When You Don’t Have Much

How to Save Money tips.

How can someone save when he is not having enough money? Talking about savings when you are broke sounds like a paradox. The truth is that, no matter the level of your income, you can still save. What you need is to learn how to save money come rain come sunshine. Everything bothers on knowing what to do and your determination to do it. This article  on how to save money applies to almost everybody. It is practical and doable. Without wasting your time, let me quickly show you how to save money even when it seems you don’t have enough money to do so.

Draw a budget

A budget is a document that shows your future planned income and expenses. The first place to start is to list all your sources of income and be specific about when you expect to receive them. If you have an existing budget, this may be a time for you to review it. Compare your existing budget with your actual income and expenditure. The trend of your actual income and expenditure will help you in projecting the future income and expenditure more accurately. If this is the first time you are drawing up a budget, you need to reflect on the source of your income and what you usually spend money on. Your spending will cover such things as foods, utility expenses, mortgage repayment, transportation expenses and so on. The expenses will cover all those things that you spend money on. The only new thing you will need to introduce here is “savings”. From this time on, you need to see savings as a very important ‘spending’ that you will not afford to skip. In fact, this should come as number one on the list of your personal expenses. I know you are already thinking that it is not possible for you to save because what you earn presently is not enough to meet your expenses. I am not disputing that. But the question I want to ask you is that how do you afford to pay for your telephone or transport expenses? The truth is that, you will always have money to spend on things you consider very important to you. Before the advent of GSM, almost everybody complained about lack of money. But today, people have not only bought phones, they make sure that the phones are recharged so that they can have access to both voice and data. Mind you, that does not mean that their salary or income has increased. So, where are they getting money to recharge their phones? So, at this point, I will say that you should not allow your expenses to intimidate you. Just make provision for savings in your budget by specifying the amount you want to be saving at the end of every month.

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Separate Needs from Wants

This is the time to go through your list of expenses again and rearrange them in term of priority. You should rank those expenses that are necessary first. Top among such list will be food and your rent/mortgage repayment. This type of expenses is classified as “must have” or your needs. Those things that are not totally necessary are “wants”. You must rank the expenses in this category at the lower part of your budget. Continue to allocate the available income to all the important expenses. After this, you can continue by allocating the remaining income to those expenses that are less important. Don’t forget that I said you should rank your savings first. I suggest that you make your savings to be ten per cent of your income. However, if this is too much for you at a start, you can start with lower figure. But you just need to ensure that you allocate something reasonable to your savings. The principle about personal finance is that you should pay yourself first by way of savings or investing.

Cut Expenses

It is time to review your budget. If you look at the figures critically, you will realise that there are certain expenses you can cut by fifty per cent or eliminate completely. Even, some of those things you listed as very necessary can be reduced. For instance, you can reduce your expenses on foods dramatically just by changing your menu or eating habits. If you normally eat outside, you can decide to be preparing your food by yourself in house. This will definitely save you some expenses. Also, if you are the type that only use internet to check and send mails once in a while, you may choose to go to cybercafé instead of paying for internet subscription. If you are still finding it difficult to cut your expenses, I want you to ask yourself this question: “supposing you lose your job now, will you still continue to spend this money this way?” You don’t need to wait till you lose your job before you learn how to rationalise your spending. Just as I mentioned earlier, it is discipline that you need. If you discipline yourself, you can save.

If you follow these three simple steps, you will realise that you actually have what to save. It is a very how to save money tips that anybody can adopt.

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