Updated: Oct 12, 2020
You can be earning thousands of dollars a month but if you’re not educated in the art of saving, the cash that you make might as well turn into a liability.
Liability: a person or thing whose presence or behavior is likely to put one at a disadvantage.
Imagine your hard earned money turning into a disadvantage. Sounds awful, right? You can scoop the internet for ways to make more money but unless you know effective money management, you can’t turn into richie rich.
Make notes because reading about how to save money doesn’t save money. It’s all about taking action. NOW. Tell yourself, I’m going to start saving money because if I don’t i’ll be stuck with a lifestyle motto that is: Live within your means and resources. But if you want to think like a billionaire, your motto should be: Hey, I need that Versace dress? I should increase my resources. Resources increase when you save and have money to actually invest.
Here are a few proven tips that can help you save money.
Change Your Lifestyle:
Look at the images of these people below.
What do you see? Laid back individuals with a casual style? Nothing too fancy? You wouldn’t look at them twice if they crossed you on a street. Well, the first picture is of Mark Zuckerberg, Chief Executive Officer of Facebook. The second is of Evan Spiegel, CEO of Snapchat. Weren’t expecting that, were you? Being rich is related to your bank balance, not how you look or live your life.
The rich lifestyle you see on instagram is very different from reality. It is created to entice you. It is not #goals and it clearly isn’t stuff you need to aspire to achieve. Eat homemade food instead of eating out, spend less on designer clothing and accessories, conserve energy, shop during sales only, etc.
Try the 30 day saving rule:
Before making a big, impulsive purchase that is costing you some serious money, try the 30 day rule. Here is how it works:
Think of the purchase that you’re making and write it down somewhere
Paste this note somewhere you can view it on a daily basis.
Commit to thinking about it for the next 30 days
At the end of the 30 days, if you still feel like buying it then go for it else you put the money into your savings account
The 50/30/20 rule:
Elizabeth Warren—U.S. Senator from Massachusetts and also a Harvard bankruptcy expert coined the 50/30/20 rule. Here are the steps:
Calculate your after-tax income
After-tax income is the income that remains of your paycheck after taxes are taken out such as state, local and income taxes.
Spend 50% of your after-tax income on your needs and obligations such as bills, grocery, insurance etc.
Spend the 30% on your wants. Ordering food, buying clothes, upgrading decisions etc. These are all things you might want to buy but are not absolutely essential. If you are able to apply the 30 day rule to these, that is even better
Allocate 20% of your income to savings and investments. Focus on investing and to save up to meet personal financial goals down the road. This money can also be used on debt repayment.
Invest. Invest. Invest
Doing a 9-5 job, saving some cash and partying a little might be the little joys of an average man’s life but for those who aspire to be financially sound in the future, investment is what brings peace and content. Investment isn’t a scheme to be rich overnight, rather it is a way to increase and consistently grow what you already have. You can invest in money market funds, bonds, stocks, mutual funds, starting a side business etc. If you have extra cash, why is it still in the bank? Invest and watch your life change as the cash inflow increases.
As said by Bill Gates, “If you are born poor, it's not your mistake. But if you die poor, it's your mistake.”