You wish to save up money, but no matter how hard you try, it’s still impossible to find ways to save money.
You have a smartphone to plan and an e-budget app to spend less, but something always comes up. Maybe you need a down payment for the home of your dreams? Or you’ve decided to propose to your partner? Or perhaps you’re facing an unexpected bill for an insurance deductible.
The good news is there are plenty of straightforward tips to save money and breathe some fresh air into your budget. Here are 5 money-saving tips to help your spending, plan your budget and start saving money in no time.
1. Determine which are your assets and liabilities
Before you start anything, understand the definition of assets and liabilities;
- Assets – what brings you a daily, weekly, monthly income such as a business, investments, real estate
- Liability – what will cost you money such as loans, mortgage, credit card debt and so on.
Purchasing a property can be seen in two ways – an asset or a liability. For example, if you buy a house in Shah Alam and start building a life there, your monthly commitments become a liability.
Buy a property in Kelana Jaya to market it as a rental for new tenants, and you have created an investment. With this investment, you create an infinite loop of income as the masses always need rentals.
In simple terms, convert any liability to an asset = passive income on an infinite loop.
2. Eliminate unnecessary outbound cash flow
Having monthly debt payments are the worst hurdle when it comes to saving for a rainy day.
With debts robbing your income and you need to pay it off in the fastest way, try the debt snowball method. Start by paying your debts in small amounts to the largest – thus freeing up your income for your other saving goals.
Since we have technology at our disposal, use it to automatically transfer funds from your checking account to your savings account monthly. Try 10% of each paycheck, and once you are more comfortable, try 20%, 30% and so on.
3. Learn to plan and manage your cash flow efficiently
They are ways to manage your cash flow, be it big or small, to ensure you have your savings ready by the end of the month.
Start by creating a financial history – choose either a journal or a note app on your smartphone, record your monthly incomes and expenses, including your source of income (if you have multiples).
By recording it down, you will see your spending habits out in the open, and you can readjust in the upcoming months.
Once you have that covered, set a goal! It can either be short-term or long-term or even both if you planned everything well.
For example, if your long term goal is to have a passive income of RM2000 per month in the next 5 years, then your short term goal can be used to pay off your debts within a year.
4. Look for the perfect mentor of wealth
If you are filled with worry that you would not be able to discipline yourself while managing your spending and finance, then look no further than a financial mentor to guide you, supervise you, and provide you with professional advice along your financial journey.
The definition of a mentor…
…is a person who is at least a few years ahead of where you are and represents where you want to be in your dreams and aspirations.
This mentor can be somebody you admire, respect, and trust and get along with, be your friend or a business acquaintance.
Those who have successfully ascended to financial freedom will be happy to share their experiences and lessons to help you avoid the wrong path or spending blindly.
5. Learn from your mistakes and move forward
As you start your journey towards financial freedom, you will inevitably experience various disappointments and setbacks, and it is normal to fail in your investments and planning.
But don’t be an average Joe and just use the same methods as everyone else!
In the words of William Arthur Ward;
“The price of excellence is discipline.
The cost of mediocrity is disappointment.”
Every failure is a great opportunity for you to be inspired, and dealing with them requires nothing more than mindfulness.
As long as you focus on learning from your mistakes, you will become more resilient and see the many growth opportunities.