How To Save Money The Right Way

in #saving3 years ago (edited)

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The Most Important Part of Saving Money: Recording Your Expenses

Some people use accounting software like Quickbooks or Quicken.

You can record every purchase for 20+ years if you would like to. But these services cost money. Fortunately, there are free ways to get the same results.

Why should I care?

Well, if you have $400 left for the month when you expected to have $800, that is a problem that needs to be fixed. Especially if you’re taking care of children.

And if you can look back at your spending for the past month and see what you need to cut down on, you can start to piece together a budget that really works well for you.

Some people don’t know how much money they spent on groceries for the past month, they don’t know many subscription services they’re using, or even what their usual phone bill payment is.

But you don’t have to be like them. That’s careless and you’re reading this because you want change and you want to plan for your future.

This is the best method and it will always work
First you need to buy a decent budget book.

You also need to buy good a pen to write down everything.

On the very first page, write down the month, day, and year on the top page and under that write “Expenses for the month of May.”

Now write down the purchases you just made. It should look like this:

15 May 2018
Expenses for the month of May

15 May – Pen – $2.99

15 May – Notebook – $5.99

At the end of the day, add up the expenses together. That should look like this:
15 May 2018
Expenses for the month of May

15 May – Pen – $2.99

15 May – Notebook – $5.99

Total expenses for the day of 5/15/18: $ 8.98

At the end of the month, pick a day (Sunday Afternoons) to add up the expenses for each day and get the exact amount of money you spent that month.

Now take your income for the month and subtract your monthly expenses
It should look like this:

Income: $2,000

Monthly expenses for May: $1,600

$2,000 – $1,600= $400

Revenue for the month of May: $400

Next start to categorize to improve your budget

Figure out how much you spent on gas, groceries, eating out, movies, subscriptions, bills, car payments and everything else.

It should look something like this:

Gas: $100
Groceries: $300
Eating Out: $100
Movies: $50
Subscriptions: $50
Rent: $800
Car payments: $200

So now you can start to tweak things. Maybe you figure out that you can spend $50 less on groceries next month. That brings your revenue from $400 to $450.

Then you find that you would rather watch Netflix than go out to the movies. That $50 on movies drops to $10.99. Now you can save $460.99.

Then you finally pay off your car and no longer have to pay $200 a month. Now your monthly revenue goes up by $200 and is $660.99 now.

You decide that you want to save even more money so you only spend $50 on eating out every month instead of $100.

Now your monthly revenue is $710.99.

Now you can put $500 in savings every month and put $200 in another account for emergencies. The extra $10.99 goes in your 401k every month.

If you are living paycheck to paycheck this will get you out of that habit too.

Almost done. Now we have to make goals to save for
Come up with some things that you would like to save your money for and an estimate of how much it will cost you.

Down payment for a car: $5,000

Vacation: $3,000

Emergencies: (6 months of expenses) If your monthly expenses are $2,000 you should have $12,000 in an account for emergencies.

Your child’s education fund: (2 years of Community College) $8,000. The rest they can cover through their own part-time work while in college or apply for loans and grants.

Retirement: The yearly limit for a Roth IRA is $5,500. That’s the most that they will let you put in every year. These accounts are great because when you reach retirement age and take the money out you won’t get taxed.

Since the limit is $5,500 I just put in $100 a week which adds up to $5,200 a year which is pretty close.

Once you implement these changes, you’ll be saving money in no time.


Stop spamming Steemit

Great tips. My wife would love this!

This account copy and pasted other people’s content. Not helpful to Steemit community to reward such content

Really nice post too :D love it. I'm 22 years old and starting to save money now is very important for the next years

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