Saving money can sometimes be difficult, especially when you’re in the paycheck-to-paycheck cycle and barely getting by. The following steps will help you to save money and live a stress-free life, with plenty of cash in your bank account at the end of each month to cover any expenses that arise unexpectedly. If you follow these steps, you’ll have extra cash left over at the end of each month and can even have your savings account balance reach four digits!
5 TIPS TO SAVE MORE MONEY
- Every day, set aside an amount of money to put in your savings account. You can use this figure as the amount to save in each paycheck or month by automatically transferring the funds on payday (depending on your employer).
- Set up automated bill payments for monthly recurring bills that you have to pay like car insurance, phone bill, the electric bill, etc.
- Create a plan for emergencies
- Set aside some money for periodic expenses that aren’t predictable such as car repairs
- Track your spending habits with tools like Personal Capital so you know where the money is going
4 RULES OF FINANCIAL LIVING
Rule #1: Live below your means. Even if you make $50,000/year, try to keep your lifestyle budget at $40,000/year. This means that even if you want to upgrade your car every 3 years instead of every 5 years, for example, reconsider! Why spend $4,500 more when you can stay within your means? One bonus is that by sticking with this rule, over time we accumulate less debt from interest rates and have more money in the bank to save for emergencies.
Rule #2: Save 10% of everything you earn. Yes, 10%. Sounds like a lot but it’s actually very manageable! For example, if you bring home $10,000 per year after taxes ($8,333 after taxes), then you need to save $833 per month or about $100 per week. You can use either 10% of your paycheck or last month’s income as a baseline for what should be saved each month.
Rule #3: Keep track of all expenses and review them monthly. Keeping track of expenses will allow us to see where our excess spending might be coming from – maybe we eat out too much, go shopping too often, travel too much – so on and so forth. By keeping an eye on our spending habits, we are able to curb them and create a healthier financial situation for ourselves. It also helps give peace of mind because if there ever comes a time when we need to borrow money or take out a loan (which happens!), knowing exactly how much we’re spending beforehand will help prevent us from becoming overextended.
Rule #4: Have 6 months’ worth of living expenses saved up in case something unexpected happens such as illness, layoff, etc. We don’t know what tomorrow may bring so it’s important to prepare for anything.
THE 7 WAYS TO GET STARTED WITH AFFORDABLE HOUSING
One of the biggest challenges that families with children face is making ends meet. In general, it can be tough for anyone to get into the housing market. But for those who are struggling financially, it becomes much more difficult. Buying an affordable home is a viable option for many people to invest in their future – despite what you might have heard about saving up 20% to 30% of your down payment from the get-go. Here are some ways to afford a house:
1) Get together what kind of money you need to put down – whether it’s 10%, 15%, or even 25%. Then work backward and figure out how much income and savings you’ll need to get there by living responsibly while figuring out where your priorities lie. Once again, live like a student while working towards homeownership!
2) If a house is just way too expensive for the type of budget you have right now, consider looking for houses in other areas. These might cost less because they’re farther away from the city center. There are usually pros and cons associated with this decision though so keep both factors in mind when thinking about making such a move. On one hand, you’ll spend less on commuting expenses and food which will give you a little bit more wiggle room in your monthly expenses. On the other hand, your property taxes may go up if your home is assessed at higher rates than what’s typical in the area.
3) The Federal Housing Administration (FHA) offers mortgage insurance which helps lower loan costs for first-time buyers.
4) Consider saving up for your down payment over time if you don’t have it right now.
5) Don’t be afraid to ask for help from your family or friends.
6) Check out local housing programs. Many areas have these that can help you buy an affordable home if you’re willing to make some modifications on your own.
7) If you need to delay your homebuying plans, try renting an apartment or house instead. This will give you time to build up some savings without putting all of your eggs in one basket. It also gives you time to save up for your down payment if needed. Renting has another perk too: it helps keep you accountable since living on someone else’s schedule makes it hard to spend money impulsively. When it comes to buying a home, there are many factors that can impact how much (or how little) a house you can afford. But as long as you’re prepared ahead of time and have realistic expectations, there are ways for everyone – even those with limited resources – to buy an affordable home.
6 WAYS TO CREATE AN EFFICIENT CASH FLOW
- List all your fixed monthly expenses
- List your variable monthly expenses
- Identify places where you can cut back on spending
- Create a budget based on these numbers
- Draw up an emergency fund of 3-6 months’ worth of living expenses to cover unexpected costs that may happen in the future
- Keep track of everything by using an app like Mint or Quickbooks Online