My financial situation changed 360 better when I started saving money regularly, I shocked when I figured out that I spend too much in dining out, cloth, luxury phones internment.
Saving money is core habit you need to acquire if you really want to build wealth. Wealthy people save money consistently every month by living below their means, then they use saved money to build wealth.
Saving alone might not make you rich still it’s the first stone that will defiantly help you go rich, If you save money consistently for years you might be rich, in the other hand if you save money then invest it smartly you will absolutely be rich faster.
In this post you will know why saving is important, how to save money in simple way as beginner in step-by-step guide, and advices to help you gain the habit of saving regularly.
How beginners can start saving money
First know how much do you earn each month precisely, track you expenses for one month every single dollar you spend is count, build emergency fund, and use the 50-30-20 rule to budget your money, cut unnecessary spending.
In the following part of this post I will walk you through practical step-by-step guide to start saving money consistently.
5 simple steps to start saving money
Know your monthly income
Know how much do you earn each month exactly salary, tips, extra income do not miss a dime
Track your spending
Track and write every dollar you spend for one or two month, any cents you spend should be noticed, be accurate about your expenses
Use the 50-30-20 rule
This rule classifies expenses into three main types
50% for essential expenses you must pay such as rent or housing, food, electricity and water, transportation, basic healthcare…
30% for wants such as eating out, entertainment, shopping, travel, subscriptions, hobbies..
20% for saving and debt for emergency fund, saving for important financial goals, investing, and this 20% you save consistently is what will build your wealth.
You can save more than 20% but it is not recommended to go less than that, the more you save the better you are going to be in the future.
For example if you earn $1000lmonth after tax
Category percentage amount
Needs 50% $500
Wants 30% $300
Savings/debt 20% $200
Total 100% $1000
One final thing the 50/30/20 is a guideline, not a strict rule. If your income is low, have heavy debt or high essential expenses you can temporarily use something like 70/20/10 which is 70% for needs, 20% for wants and 10% for saving.
The goal is to create a system where you consistently spend less than you earn and put money toward savings or wealth-building.
Get rid of debt
Debt is always your worst enemy, you have to get rid of debt if you want to be rich and be achieve financial freedom, there is two common ways beginners can use to eliminate bad debts you can check this post for more info.
Build emergency fund
your 20% must go for building emergency fund first, pay off debt then investing, emergency fund protect you when something happened suddenly like illness you use this fund to pay expenses rather than use your main savings money
while investing will help you build wealth by increasing the money you keep saving each month while getting rid of debt will strengthen your financial states and make you invest comfortably.
Start saving now
You can open saving account and start butting your money every month. it recommended to open high interest saving account because they pay more interest than the normal saving account.
And be careful and never spend from your saving money unless you use this money to make more money, start a new business or investing.
How to save money smartly
From my experience you can smartly save money by assign savings with financial goals (buy a car, house, starting business…) then follow a simple yet clear plan consistently every month until you gain the habit of saving.
As a beginner you might face difficulties to save money especially if you have the habit of spending too much but do not panic all you need to do is start saving, start with what you can 10 dollar or even 10cent.
It is not about how much you save every month it is about getting the habit of saving consistently no matter how much. Remember that even small amount consistently can make a difference.
What to do after saving money consistently??
Increase your monthly income: you want to save more ok earn more, then avoid spend more when you earn more. You can increase your income by learning high paid skills, start new business, invest your money smartly or work in many jobs etc.
Invest your saved money consistently
Investing increase your money value over time and protect it from inflation so try to learn more about investing, read book and courses about investing.
5 tips that helped me save more as a beginner
Stop dine out and make your food at home
Spend less than you earn
Cut small daily costs
Connect your saving with financial goals
Stop adding new debt
Follow a clear plan
Say something like I want to save 1000 in the next 6 month then I am going to use this money to start my online blog, this way you are making clear path to yourself and that will make you able to save simply.