Three Easy Rules to Save Mone

The three easiest rules of saving money are: "Establish a budget", "Pay yourself first", and "Eliminate debt by cutting expenses".


Today most people live paycheque to paycheque and it’s not uncommon to have ten different monthly payments. There are more and more people getting debt consolidation loans and it’s becoming harder to save with the easy access to credit. This is creating financial hardships with not being able to save and can interfere with your financial goals and dreams. By getting back to the basics of saving money it will help you to establish your financial goals and to manage your debts effectively.

The three easiest rules of saving money are; Establish a budget, Pay yourself first and, Eliminate debt by cutting expenses.

Establish a budget
One of the most important ways to begin to save is to establish a budget and most financial institutions have free budget books to keep track of all your expenses. Many of us couldn’t be bothered to start a budget, but if you don’t know how much money is available then it’s difficult to save. A budget is a financial snapshot of all your positive cash flows versus your negative cash flows. Generally most budgets are calculated monthly therefore you must keep track of all your expenses over a one month period. By taking the time to record all your expenses and implementing your budget, it will give you either a positive or negative monthly cash flow. Now you can begin to save to reach your financial goals. The budget will give you back financial control over your expenses and taking only about two to three hours a month, I consider it time well spent.

Pay yourself first
The next best way to start saving money is the “pay yourself first rule.” Essentially, you are making sure you’re saving for yourself before paying others. The best way to do this is to have 10 percent taken off your paycheque and directed into a high interest savings account, this way you won’t see the deduction or really miss it as well as forcing yourself to live within your means. If you don’t start saving now, then you will keep delaying. Once you establish a savings plan then you can start saving for your financial goals. By doing this your net worth will increase and you’re creating positive behavior. Most people build their wealth over a lifetime not overnight. Once you have started paying yourself first then you can start looking at suitable investments that match your timeframe.

Eliminate debt by cutting expenses
The next most logical way to start saving is to eliminate debt and cut expenses. The major difference is to try and eliminate ‘bad debt’ versus ‘good debt.’ Paying off loans for investments such as property or capital is termed ‘good debt’ because these debts have the potential to appreciate and increase your overall net worth. The debts to eliminate or reduce are the unnecessary, or splurge buying expenses. We all know how much a daily cup of Starbuck’s coffee adds up to over a month and some of us like to spend money on unnecessary consumer items. You really have to figure out how much of these purchases you really need and cut the rest of these expenses down if you’re paying too much. Also work on paying off the highest interest credit cards first and it’s better to have fewer credit cards than too many. This will also help improve your credit rating. The most effective way to save money is to prepare a budget to help you control your expenses and eliminate unnecessary ones. Most of us don’t spend enough time managing our money. By paying yourself first you’re putting yourself ahead of others and creating a nest egg. Once you have a budget, then you can eliminate unnecessary debt and take control over your finances. Too many people let consumer companies take advantage of them and it’s important to be aware of this in your monthly spending. Try and eliminate bad debt and know what good debts are. Keeping track of your cash flows will help you have piece of mind knowing that you’re taking action for your financial goals and dreams.

Good luck, stay consistent and stay tuned!


Source: Todd Kennelly

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