All of the money you spend can be classified into one of four categories: needs, wants, savings, or debt. A need is something that keeps you alive, like food and water. A want is something that makes life more enjoyable but is not necessary for survival. For example, if you eat lunch every day at work, this would be a want because it makes your life more enjoyable, but it’s not something you need to survive.
Unfortunately, wants to take over very quickly and can become needs if you are not careful. This is an important skill to learn because the biggest problem people have with money is spending beyond their means. It doesn’t matter how much money you make; you can’t spend more than you make.
The best way to combat this is to create a realistic budget of every dollar you earn from your salary, government assistance payments, tips and other sources. Then ask yourself if all of the items you are spending money on fit into their respective categories of need or want.
To start saving, create a savings plan:
1. Make a list of all your debts plus the interest rates you owe on them and where possible add up how much you will pay in interest per year;
2. Now make a list of your assets including your home, car, savings, investments etc.;
3. Using the lists above make a list of all of your wants and needs;
4. List what you’ve spent in the last 12 months for each category (wants and needs) adding up how much money was spent over 12 months.
5. Compare your lists to find out where you can cut back on spending.
6. Use the money saved to pay down your debts or start an emergency fund that is equivalent to three months’ worth of expenses.
For every dollar you save, plan on putting either one dollar towards debt reduction or three dollars towards an emergency fund savings account.
Now that you have a clear understanding of where all your money is going and how to realistically save it, try using the following steps:
1. For one month take all of the money you would spend on your daily coffee and put it into an emergency savings account;
2. Once that account has $500 in it start working on your debt reduction;
3. Once the debt is gone use all of your freed up monthly income to pay down your loans faster.
Being honest with yourself about where you are spending your money and how much you have saved will help you go a long way in getting out of debt and saving for the future. Since you now know what changes need to be made, it’s time to start making them today!
Saving money should be a part of our basic learned skills when growing up. But in the US, finance 101 is not a part of the educational system, leaving us behind the curve when it’s time for us to manage our finances. Often these lessons begin in College, and even then there is a lack of systematic bacis finance principles.
Before you can even begin, you have to say NO to all of the spending—and stop thinking that you actually need all the stuff you’re spending all of your hard-earned money on. Just don’t spend anything. by listing all debts plus their respective interests, all assets including savings accounts and investments, spending on wants and needs, create a budget of every dollar earned, comparing it to where you can cut back on spending to pay down debts or starting an emergency fund of three months’ worth of expenses. $1 saved for every $3 saved for paying down debts or building your emergency fund. Try using the following steps:
For one month take all of the money you would spend on your daily coffee and put it into an emergency savings account; Once that account has $500 in it start working on debt reduction; Once the debt is gone use all of your freed up monthly income to pay loans faster. Be honest with yourself about where you are spending your money and how much you have saved will help you go a long way in getting out of debt and saving for the future.
Are you ready for a savings plan
the biggest problem people have with money is spending beyond their means. It doesn’t matter how much money you make; you can’t spend more than you make. The best way to combat this is to create a realistic budget of every dollar you earn from your salary, government assistance payments, tips and other sources. Then ask yourself if all of the items you are spending money on fit into their respective categories of need or want. We have deep seated desires (some call this our lizard brain) that can get in the way of making rational decisions about our spending . So we must be vigilant about applying our new found savings plan so we don’t slip back into old spending patterns. First, list all debts plus their respective interests, all assets including savings accounts and investments, every dollar you spend on wants vs. needs. Next get out your bank statements for the past three months or your credit card statements if it’s not a checking account where you are accumulating debt. Now take everything you have spent in the last 12 months for each category (wants and needs) adding up how much money was spent over 12 months. Compare your lists to find out where you can cut back on spending. Use the money saved to pay down your debts or start an emergency fund that is equivalent to three months’ worth of expenses.
Now that you have a clear understanding of where all your money is going and how to realistically save it, apply these steps:
1. For one month take all of the money you would spend on your daily coffee and put it into an emergency savings account;
2. Once that account has $500 in it start working on debt reduction;
3. Once the debt is gone use all of your freed up monthly income to pay loans faster. Be honest with yourself about where you are spending your money and how much you have saved will help you go a long way in getting out of debt and saving for the future. Since you now know what changes need to be made, it’s time to start making them today!
Saving money is a calm state of mind, but before you can even begin, you have to say NO to all of the spending—and stop thinking that you actually need all the stuff you’re spending all of your hard-earned money on. Just don’t spend anything. by listing all debts plus their respective interests, all assets including savings accounts and investments, spending on wants and needs, create a budget of every dollar earned, comparing it to where you can cut back on spending to pay down debts or starting an emergency fund of three months’ worth of expenses. $1 saved for every $3 saved for paying down debts or building your emergency fund. Try using the following steps:
For one month take all of the money you would spend on your daily coffee and put it into an emergency savings account; Once that account has $500 in it start working on debt reduction; Once the debt is gone use all of your freed up monthly income to pay loans faster. Be honest with yourself about where you are spending your money and how much you have saved will help you go a long way in getting out of debt and saving for the future. Since you now know what changes need to be made, it’s time to start making them today!
The biggest problem people have with money is spending beyond their means. It doesn’t matter how much money you make; you can’t spend more than you make. The best way to combat this is to create a realistic budget of every dollar you earn, compare it to where you can cut back on spending, make the changes needed and you will be well on your way. By listing all debts plus their respective interests, all assets including savings accounts and investments, spending on wants vs. needs, create a budget of every dollar earned by comparing it to where you can cut back on spending to pay down debts or starting an emergency fund of three months’ worth of expenses. Lastly save $1 for every 3$ saved in paying down debts or building your emergency fund. If you are ready for a savings plan then use the steps given above in order to get one!
The financial crisis which recently hit our country has caused many people problems that they had never expected such as bankruptcy and foreclosure . The big question that many people are asking is how did it happen and how can I avoid actually sinking into this hole of debt? The first thing anyone should do if they find themselves in this situation is stop spending. This means cutting back on everything you spend your hard-earned money on including coffee, lunch, gas etc. After you’ve stopped the bleeding of spending begin listing all debts plus their respective interests. Take each balance and divide by 12 to determine the amount needed to pay each month for each loan. Start paying more than the minimum payment needed on all loans until there are no longer any debts hanging over your head. Once all of the debts have been repaid start building an emergency cash fund equal to three months’ worth of expenses . Try using these steps to help you climb out of debt.
Saving money is one of the most important things you can do in your life. It’s not just about being frugal, it’s also about being financially responsible and making sure that you have a plan for when emergencies happen. If this post was helpful to you or if you know someone who could benefit from reading this article, please share with them! Thank you so much for taking the time to read my blog post today – I hope it helped answer some questions for you 🙂