Perhaps your life is stable and well-planned, but what if a financial emergency arises? Are you ready for it? What would you require in that case? Money! Saving money is critical to avoid such a scenario. In this article, we will discuss 7 easy ways to save money in 2022.
1. Prepare a Budget
Making a detailed, realistic budget that you can stick to is the simplest way to get your finances back on track. The key to creating a successful budget is to avoid setting unrealistic goals for how much money you will save and how much extra money you will earn. Instead, use your budget to precisely track and describe your financial situation. Knowing how much money you have, how much you spend, and how much you can save is the first step toward true financial freedom.
To begin, create a spreadsheet document (you can use Google Sheets or Microsoft Excel). Make a list of your monthly expenses in the far-left column. These could include the following:
Savings, Mortgage/rent, Payment for the car, Automobile insurance, Healthcare coverage, Taxes, Loans for students, Food/Groceries/Other Necessities, Internet, Phone, Entertainment.
Then, on the right, enter the amount you spend on each one as well as the date the payments are due as a reminder. To make sure you’re not spending more than you’re bringing in, add up the totals at the bottom. Examine your spending to see if there are any areas where you could be spending more or less.
2. Set up an emergency fund
Another effective way to reduce financial stress is to begin saving for unexpected expenses. If you are in debt and are not earning enough to save, accumulating a large fund may appear unrealistic.
You should aim to have at least Rs.75,000 in your emergency fund until you are debt-free. Once you’ve saved enough money, aim to have three to six months’ worth of living expenses in your fund.
An emergency fund can and will likely relieve your stress in a variety of ways. Most importantly, it will give you the psychological security you need to stay calm in the most stressful situations. If any unexpected costs arise, such as a vehicle repair or a last-minute trip to see family, you will be prepared to meet them. As a result, you will avoid getting deeper into debt and will be able to avoid solutions such as borrowing money or accruing credit card charges that you cannot afford to pay off.
3. When you go shopping, make a list.
Have you ever considered how much money big brands like Big Bazaar make from companies that display their products on their shelves in order to induce customers to buy more of those products? They make a lot of money by displaying their products because it increases their sales significantly.
It is possible that you will come over with a heavy bag of clothes and empty your pocket while out shopping. However, making a list before going shopping will prevent this situation from occurring and is one of the most impulsive ways to save money. The only reason for this is that you will know what product and how much of it you require.
4. Stay away from debts.
Always use a debit card rather than a credit card. When you use a credit card, you may go over your limit and make unnecessary purchases. You will also be required to pay a late payment fee or a no-interest charge, as well as make unnecessary EMI transactions and pay interest on those transactions. Maintaining your financial discipline is possible when you do not use a credit card because you will be aware of what you are spending out of what you have.
5. Purchase Health Insurance
Purchasing a health insurance policy has become a requirement. You are not saving money if you have not purchased it for yourself and your family. You are putting yourself and your family under undue stress if any of your family members become ill.
Purchasing a health insurance policy can help you avoid situations in which medical fields are expected to rise fees and become extremely expensive.
6. Paying Off your Liabilities
It is very simple to take credit. However, when it comes to repaying those debts, you may find it difficult to repay the entire amount in one go, such as a loan being taken against property, credit for a vehicle, or any other purpose. Step up for installments whenever possible, and try to clear those debts by paying every month. You will be able to get rid of the loan this way, and no interest will be accumulated on the loan amount.
7. Keep track of your progress.
Finally, we’ve returned to strategy number one. Throughout the process described here, you should be reviewing your budget and adjusting it to reflect your current financial situation. Keep track of your progress as you begin to pay down your debt and your financial stress decreases. Knowing how much money you have, rather than being uncertain, will reduce your stress and help you develop a more positive relationship with money in general. You can even give yourself an incentive to reward yourself for your hard work.
Now, go get started!