Life seems very smooth and regular when you have a “good enough” job to cover up everything you need. Of course, you are working hard and earning money, and you have every right to enjoy the benefits that your salary is bringing to the table. You are earning and then spending and then earning and spending, and the cycle goes on nice and smooth. Right? That looks good. But what if you need something “out of the box”? What if you need extra money for something that is out of your routine? What then? Do you have something extra to cover up that “sudden need”?
Well, if you have this habit of saving money for the future, then you can meet up with these “sudden needs or events” easily. But, if you are not doing that and spend everything you earn, you need to start thinking about your financial matters more carefully. The weirdest problem with money is, it can slip through your hands if you are not using it with proper planning.
You will be amazed
to hear that almost 22% of people in the United States have $5000 or even lesser amount saved for their retirement. That’s 1/5th of the total population, and there is more to that. Apart from that, 22 %, 5% of Americans have $25000 or even lesser saved for their retirement, while 15% of Americans have not saved a single penny for their retirement. Isn’t it pitiful? As a matter of fact, it is very pitiful and alarming as well.
When you talk about saving money for your future, retirement is not the only thing that needs consideration. You need to think about everything that you can encounter in the future that cannot be dealt with “paycheck to paycheck scenario.” For example, if you are planning to buy a vehicle in the future or you want to buy a house, how can you manage that if you have nothing up your sleeves? Besides, if you are going to have kids, then you need to save for their education as well.
Things can change in a matter of time,
and without a backup, you may find yourself in trouble. While planning your financial matters, do you consider critical times like an economic crisis or being jobless in the future? It may sound harsh, but you never know what is going to happen in the future. That is why you should be prepared for it, and you must have enough amount in your “savings box” to deal with such circumstances. Savings have an undeniable impact on your future financial matters. Once you start realizing its importance, the next thing in line is setting realistic financial goals, and if you are looking for some effective ways for “how to save money for future,” then keep on reading what comes next.
Setting a budget:
You must be hearing this term “united states budget for year xxxx” for a very long time. Right? But what is a budget, or what is meant by setting a budget? In layman’s terms, budgeting means allocating your financial resources (money) for different purposes specifically. In cases of states and countries, this thing is very complex and “huge.” But, the pattern is the same at all levels. While talking about saving money, you need to make a budget. You need to allocate specific amounts for different kinds of expenses and then making room for the “savings,” but this cannot happen unless you have strong intentions for saving money.
Evaluating your cash flow mechanism:
understanding your cash flow is very important. Your inflows include your salary, bonuses, or anything that is helping you generate income. Outflows include every penny you are spending on various things. You need to identify those categories which are consuming most of your money and how you can reduce that. Evaluate your spending habits if they are matching your income’s strength or quantity?
Involve your partner:
If you are married or engaged or living with someone, getting them on board will definitely help. If your partner is also earning, then, making a collective plan for your earnings and expenses will be a better option. You need to be in agreement about certain choices that might include households, insurance plans, investment plans, etc. But, if things are not working out between you, it can be very difficult to make effective plans and implementing them.
Identify your needs and wants:
Now, this debate is very tricky and old. But the answer is straightforward. If a particular element is necessary for your survival or you need it to make things work out, then it is your need. Otherwise, it is a luxury. For example, a button is considered as a need. But, cufflinks are considered as a “luxury” item because it can work out for you with using cufflinks. Therefore, it is important to understand what your needs are and what your desires are. Fulfilling your desires is not a bad thing, but if it costs you your “savings,” then it is not a good thing either.
- Reducing your debts “burden”: If you rank all the hurdles you may face while making room for savings, your debts will definitely be ranked in the top-shelf. It is almost impossible for someone to make an effective saving plan while dealing with these debt issues, especially if there is a bank loan, and you are paying interest. Therefore, setting off your debts need immediate attention. You can start with the “debt snowball method” (settling the smallest debt first and then moving ahead step by step). Once these things are settled, you will feel relaxed and ready to go for the savings option.
- Managing your groceries:An average American spends $647 on groceries, and they are included in the “needs” category, and no one can argue on that. But, managing your groceries can definitely help you save money. It is not necessary to buy the same items every month if you already have them in the “store.” You can also plan your meals and then purchase according to that. Apart from this, you can change your habit of grabbing Oreos or a “bucket of chips” or freshly baked chocolate cookies from the aisle while doing groceries because if this keeps on going every month, then you are wasting some “handy bucks.” You can also use the “groceries pickup” option because this can help you restrain your temptations for “unnecessary spending.” Here is a quick tip for doing groceries, “Leave your kids at home”!
- Terminate unnecessary subscriptions or memberships: As an American, there are very high chances you might have subscribed to Netflix, Amazon Prime, Spotify, fitness gym, Hulu, etc. Well, it is time to rethink about your subscriptions. You should cancel all those subscriptions that are not under your use and do not forget to switch off the “auto-renew” option while doing that. However, if you do not want to cancel these subscriptions, then you can consider sharing them with friends, family, or neighbors. This is a win-win situation for you and your partner, and it is beneficial for cost reduction.
- Do not tell me you are still using the cable, are you?: Everybody knows that cable prices keep rising regularly. On average, monthly charges for a cable connection are approximately $106, which is roughly $1200 per year. Why would you spend this much amount on such services when there are alternatives like online streaming.
- Ever considered sharing an apartment: If you are living in an apartment, then you are paying its rent, utility bills, and other similar expenses. But, have you considered sharing it with your friend or a colleague or a family member? No? Why not? Imagine if you can share your apartment with your friend or colleague. Then, you will have to pay half of everything, and you can save a lot of money every month if this works out.
- Unsubscribe from promotional services or emails: You may have subscribed to promotional messages or emails related to promotional sales, special offers, or discounts, and to be honest, it is not a bad thing. But, these subscriptions are charging you monthly or annually. These subscriptions can be tempting, but clicking the “unsubscribe” button can save you some “useful bucks.”
- Purchasing or borrowing?: Another choice you have to make is “which is a better option between borrowing or buying”? The answer is simple; if you need something often, then go for the “purchasing” option. Otherwise, borrowing is a cost-effective option. For example, you do not need a tree trimmer very often. So, instead of buying it, you can borrow it from a friend or neighbor.
- Automate your savings: Temptations can be a big hurdle in case of savings. If you are planning to save the money at the end of the month, then, honestly, it isn’t very easy to do that because you can easily get tempted by the things that are considered luxuries. Therefore, automating your savings account is a better option.
There is no doubt that you work hard and earn money so that you can spend it later. You have every right to enjoy life, but as a rational person, you must consider uncertainties and contingencies of lifeBank.