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Personal finance is personal but here is a general rule of thumb for the amount to save from your take-home pay, 50% for living expenses, 30% for lifestyle expenses, and 20% for savings. The key factor to your financial goals is paying yourself first and then setting up a savings plan that works for you. You don’t have to use 50% of income on living expenses.
If you do not save money from your salary currently, saving 20% may be near impossible until you adjust the other two categories. What you do today and where you put the money from your salary will determine if you have options. And options can give you freedom. No amount is too small as long as you start. Below are seven 7 clever tips on how you can save money from your salary earned.
1. Track your spending
Tracking your spending will allow you to know how your salary is being used. Before giving up on saving money from your salary, review your spending for the last few months. Most times, you’ll find out that there are areas that you can cut in order to prioritize saving.
2. Reduce Your Transportation Costs
The three budget areas that make up the bulk of your transportation costs are housing, food, and transportation. Reducing costs in these areas will leave you with extra cash from your salary to save.
3. Budget Before each Paycheck
Once your needs have been met you can budget for items that are necessities but are important for you to have. If your budget allows for it, leave room for money you can spend for fun. Prioritize saving money and your true needs like housing, transportation, and food costs. You should also determine which budgeting method or tool or App will work best for you.
4. Make Access to Your Savings Inconvenient
When your money is less accessible, you’ll find that it’s not as convenient to spend it. This is simply because it’s just not there for you to spend right away. A good idea is to put your savings money in a separate bank account, that you can’t easily access for spending but you can access when you really need to.
5. Set up Direct Deposit to Save Automatically
You can set up automatic transfers and withdrawals from your checking account to your saving or investment accounts. Allot a certain percentage of your earnings into a second bank account making your ability to save money from your salary even easier.
Finally, prioritize your savings and cut out some unnecessary expenses. Have fun and get creative with finding ways to save more, invest wisely and spend less.
Good Luck!!
