Become an expert: all you need to know about saving and budgeting

When we think about saving money, we usually feel like we need to change our whole lifestyle in order to save just a few bucks. But there’s no need to do extreme things in order to get your finances back on track.

Managing your personal finances defines your capacity to run your financial life. This includes the creation of a budget, saving money and even planning your retirement.

If you already feel a bit anxious about organizing your personal finances, take note of these tips that can help you save money and manage every aspect of your financial life.

Basic tips

•    Make saving money a habit. Always separate at least a small amount of money when you receive your payment. Even if you receive an unexpected windfall for a treat, take what you need and put the rest in the bank.

•    Track your spending areas. If you are having problems setting your budget, try at least to identify which are those areas in which you are spending more. Maybe you are dining out too much or buying clothes you don't actually need. If you are capable of tracking them, you will be more aware of those spending next time.

•    When planning your retirement, calculate your future needs by adding 10% to your pre-retirement expenses. This way you can plan how much extra money you will need to save.

•    If you are planning to get a car, you should use the 20/4/10 rule to finance it. This means that -if you borrow money- put down at least 20%, don't take more than four years to finance it, and put a maximum of 10% of your income towards payments.

Save without hating it

If you are trying to improve your budget and you want to start cutting some costs and save some money, you are in the right place. Saving can be frustrating, especially if you feel deprived. Why? Well, because there is just no way someone can consistently do something through time if they are going to hate the process and feel bad about themselves. Not even when it comes to saving money. 

Chances are, if you feel deprived you will most likely drop your saving attempt before you can build a healthy financial habit. In order to avoid that, here are some simple things you can try:

Collect coupons

If you do it right, coupons can save you a ridiculous amount of money. Next time you get your mail, check your “junk mail” before throwing it out. Local stores usually mail circulars that are basically a gold mine for saving. You can get unbelievably big discounts on groceries, movies, electronics, home goods, and other products. Also, some coupons can be combined with other coupons or other promos and your savings will be even bigger!

Pay in cash

Paying in cash has two main advantages. On the one hand, it allows you to stay on budget. When you have your money in your wallet and you physically spend it, you will have a greater sense of how you spend it and, naturally, you will be more mindful of your spending. On the other hand, and we seriously mean it, you’ll have change. And you know what you will probably do with that change? Exactly, you will probably save it. Just like when you had a piggy bank back in the day.

Cancel subscriptions you are not using

Ok, so, it might take a little while until you find what to cancel. You are probably subscribed to a lot of services you don’t actually use, so check all of your subscriptions and cancel those you haven’t used in the last 30 days. This way, you will save money and you won’t even notice. There’s no need to cancel Netflix if you really use it, but if you are currently using several streaming services, maybe determine which one you are using more and cancel the rest.

‘Should I rule out gift-giving and special occasions while trying to save money?’

Gift-giving may harm your personal finances if you don’t plan for it carefully. That is why you need to set up a gift-giving budget. Here are some tips you should follow.

1. Calculate your gift-giving budget

To plan your budget it is important to calculate how much money goes into gifts, and not only choosing an arbitrary number. Once you have determined how much you spend on birthdays, anniversaries, Valentine’s day and holiday gifts, you should add 15% (for unexpected gifts) and divide the total number by 12. The result shows how much money you need to save every month for presents.

2. Stretching your budget

If the present you want to give to someone comes to more money than you budgeted, there are ways of solving the problem. 

One option may be sharing the expense of the present with family members or friends. This way you can give pricey gifts.
Another option is shopping for big sales like Back Friday or buying things offseason.

3. Budgeting for special occasions

There are special occasions and celebrations which don’t happen every year, where christenings, weddings or important birthdays and anniversaries are included.

Knowing how much to spend on a wedding present is a bit easier than the rest: you spend the equivalent to the price per head for attendees of the wedding. 

Calculating the other presents will depend on how big the celebration party is and how close you are to the host or honored person.

Including as many presents as you can in the budget will help you be prepared for these expenses. Unexpected presents are included in the extra 15% you estimated, but you may need to adjust it a bit if you have important unforeseen parties or unplanned celebrations.
 

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