It is not a big deal for a billionaire to spend whopping millions on a diamond ring, but when you have a definite amount of money, you need to plan around your spending carefully. Saving is what you cannot ignore to tide over during tough times.
However, it is not as easy for many people as it seems. When you are on a tight budget, you often ignore to put by money. It is not just about unforeseen expenses but your planned expenses as well.
For instance, you will need money to buy a car or a house. At the time of taking out car finance in Ireland with no deposit, you will need to turn in a down payment. This is possible only when you set by money. You may stop setting aside money when you are in a tight spot, but this is still possible.
Tips for saving money while being on a tight budget
Here are the tips for saving money while being on a tight budget:
Get to grips with your finances
The first thing you need to do is know how much money you actually have. Your saving goal will depend on your earnings. For instance, if your friend is able to put aside 20% of his salary, it does not mean that you can too – because your regular expenses or your little income may not allow it.
Financial situations do not remain the same forever. If you had been able to put by 20% of your income, you could not do it now if you are out of work.
However, it does not mean you will absolutely stop laying aside money. You should analyse how much money is coming in. Your saving percentage will depend on it. If you can set aside 2 to 5% of your income, you should.
Analyse your spending
You must know how much money is going out every month. Since your income is tight, you cannot continue the same level of spending. Collect your statement of a previous couple of months to know how much money goes out of your pocket.
Make a list of the categories to know where your money is going. Now you need to find out where you can cut back. If your budget does not allow for saving, you should try to avoid inessential expenses.
It is important to remember that if you continue to spend on things you do not need, you will soon end up selling things you need. Try to come back to a lean budget. It means you will be spending money only on your essential expenses. Here are some of the suggestions:
- Stop takeaway a cappuccino as it can help you save about €10 every day, amounting to £300 per month. You can deposit them in your savings account.
- Buying lunch from a restaurant can cost you €4.5 on average, while a homemade meal will cost you around €2.
- Cancel your gym membership. Instead, go on a walk. Walking and jogging are absolutely free of cost.
- Cut back on the consumption of the drink. Try to smoke as little as possible.
These tips can help you better control your finances.
Execute a weekly saving plan
Establishing long-term saving goals will be pretty difficult when your money is tight, but you can start with small saving goals. It does not make sense to do long-term planning this time. Weekly saving goals will be much easier to manage when your financial condition is not good.
For instance, you can make a goal that you will set by 2% of your monthly income every week. At the end of the month, this will amount to 8%. Further, this encourages you to save money.
When you are to take out 8% of your monthly income in one go, it can be very scary, but you can achieve it by spanning over weeks. Another benefit is that you will pay yourself before you spend money.
Do not take on unnecessary debt
Taking on unnecessary debt can also be a cause for having financial difficulties. Since debts are readily available, you borrow money even for small needs. Just because you cannot pay for something outright, it does not mean you will rush to online lenders.
Before that, you should figure out if it is actually essential. If you manage without it, you should avoid borrowing money. It is crucial to bear in mind that you do not have just to pay down the principal but the amount of interest as well, and this will likely be much more in case you have a bad credit rating.
This is why it is suggested to borrow money when it is incredibly urgent. If you have some savings, make sure that you dip into them. You can save by paying money as interest. However, consult a lender that provides loans in Ireland at competitive interest rates if you still need to borrow.
Do not emulate other people’s lifestyle
It is good to be inspired by people but emulating their lifestyle can be very harmful to your financial health. It is crucial to understand the fact that everyone’s financial condition is different.
Just because your friend has bought a new car, it does not mean that you will also buy a new car. You cannot lead your life based on the needs of others.
You should find out if you are actually in need of a new car. If your current car fulfils your needs, you do not need to buy a new car. Emulating the lifestyle of people is one of the significant mistakes that hit your finances badly.
Investing is extremely important if you want to build wealth. In the golden years of your life, you will need to have a lot of money in your account. Investing will promote saving. You do not need to have a lot of money to start investing.
You can invest the money you save. Even if you are just trying to 2% of your income weekly, you can invest a small portion of that saving. If you do not have knowledge about investments, you can take the help of an expert.
Various apps permit you to invest even €1 based on your investing goals. Investing money will help you get the return that you can stash away. This will quickly grow your savings even when your financial condition is not good.
The bottom line
Saving is not that easy, but you should never avoid it, even if you are on a tight budget. Even if you can set aside little money, you should. After all, many a little makes a mickle.
Get an idea of how much money you have and try to cut back on your current expenses. Even if you are earning a lot of money, you should try to avoid spending on unnecessary things. This is because this will ultimately affect your buying power.
The tips mentioned above can help lay aside money even if your finances are in a tight spot.
This post was created with our nice and easy submission form. Create your post!