Saving money – how and why? | Spoko Blog

Money is never enough. Everyday bills, much-awaited presents, some big spending – consume your budget inch by inch. And even if your paycheck has a lot of zeros in it, inconsiderate wasting will quickly leave you with just one.

Why do you need to start saving and how should you do it, if you don’t have any previous personal finance expertise?

The short answer to the “should I save money” question is yes. Yet the long one can be split into reasons:

– first of all, savings can give you a feeling of comfort and security in an emergency of any kind.

– secondly, they allow you to buy something big and serious.

-and lastly, savings, when wisely invested, could earn you some more money.

There are many ways and solutions that could teach the magic of saving up everyone – even those, who have just started thinking about it.

1) Know your expenses.

As weird as it may sound – knowing how much you spend (vs the actual budget established) is the first step towards understanding the real value of earned money and saving them.

Wright down every record in an application or on a piece of paper – how much was spent and what was bought? It helps to see, where you could cut down a bit to conserve the earnings.

2) Save the same amount every month.

Even a small monthly share of your salary saved for a rainy day might become a fair amount in one year’s perspective. You can establish the exact sum depending on how big your paycheck and the expenses are. It’s not the size, what matters, but consistency. Might be not much – but every month.

3) Set up some long-term goals.

Knowing the actual reason for some financial limitations allows seeing the bigger picture. Because sometimes it might be ok to hold down the new jacket purchase for the sake of some greater personal good.

4) Say «no» to impulse buying.

Think twice – buy once. Emotional shopping can be a wonderful stress-relief therapy when it happens once per year. But if you’re constantly buying something that is driven by mood swings – this might be the issue to think of.

5) Get some additional source of income.

If you are not overspending and still can’t save enough, maybe it’s not because you are irrational or incompetent. Your salary could be too small and that’s it. If you are not ready to switch jobs right away, you might want to consider looking for some additional sources of income (apart from the main one).

6) Make your money work for you.

Don’t hide your money in the shoebox. Keep in mind that cash gets devaluated by price inflation. It’s best to store money on the deposit bank accounts in different currencies. You might also consider investing them in securities to get some stable passive income.

Last but not least – don’t save money just for the sake of saving. It’s not worth it if you refuse to buy some important things for your family and yourself. Because the main value of this process is not only about fixing your financial situation, but also bringing you peace and psychological comfort. No shortcuts.