The habit of saving allows you to establish monetary reserves for the future, achieve financial independence, and lay the foundation for purchasing goods and services necessary for growth or paying for important things like education, a car, a home, medical emergencies, or natural disasters.
How to save at home?
Saving allows you, among other things, to improve your credit history, pay off outstanding debts, and prioritize spending. Therefore, it‘s important to follow a series of steps that will help minimize household expenses as much as possible, thus reducing worries and maintaining healthy finances. Let’s explore these steps in the following lines.
General recommendations for saving at home
We can take into consideration a series of recommendations that will help us spend less money and have a healthier family economy:
- Look for deals to buy.
- Avoid impulse purchases. This habit will allow you to buy only what you need.
- Use your bank’s tools, such as virtual calculators, to track your spending and then set savings goals.
- Establish a savings plan, which can be accompanied by a budget. These combined strategies will help you define the amounts you want to save.
- Allocate money to fixed and priority goods such as housing and food.
- Ask the bank for all the necessary information about loan payment terms, if you have one. This way, the customer will know when the debt will be fully repaid.
- Use credit cards as little as possible. Credit card payments should not represent 30% of your monthly income.
How can small and unnecessary expenses be identified and reduced?
Small expenses are so-called because they are small expenditures that occur daily or frequently and are not budgeted for. These are expenses on items like candy that affect the family’s finances because, over time, they become a significant expense, or rather, a headache. To determine these expenses, it’s important to make a list of them throughout the month and then organize a strategy, such as a budget, to eliminate them and control the money so you can put it to better use. Let’s look at other recommendations for reducing these expenses, which will also improve the household economy:
Record expenses:
Write down every expense you make. These can range from small expenses, like a soda, to small ones, like money spent on public transportation, to large ones, like a mortgage or car payment. Then you can organize these expenses and add them up.
Cut these expenses:
Review your list of all those non-essential expenses and eliminate or minimize them. For example, don’t eat out at restaurants or do so only once or twice a month. Choose the most affordable plan for your pay-TV or mobile phone service. Also, avoid taking out loans, especially informal ones, as they are not regulated by law and the interest rates are very high.
Define realistic savings goals:
The amount you set for savings will depend on the goals you set for yourself. Do you want to travel? Buy a second home? Have money for the birth of your child? Each goal will determine the amount you’ll need to save and how long you’ll save for.
Determine priorities:
Establish your most important savings goals and put them at the top of your list.
Long-term goals, such as saving for retirement or medical expenses, should be at the top, and short-term or less important goals, such as leisure travel, should be at the bottom. There are other ways to save, such as the 21-day method, which we’ll describe in the following lines.
What is the 21-day method?
It consists of a method based on the premise that human beings require 21 days or more to adapt to new scenarios, such as the habit of saving, following a series of steps:
- Have a good motivation
- be consistent (i.e., save every day)
- Accept the anxiety that the process entails and the possible difficulties that the person may have during this process to save
- Establish a method that is appropriate (such as saving an amount equivalent to a daily expense and replacing it with something more useful)
- be disciplined
- keep track of all the money you save.
Following this method contributes to optimizing household finances, as it prevents unnecessary spending and allows for realistic short-term goals. In conclusion, we can affirm that saving is a habit that allows everyone in the family to address emergencies and plan for the future. Responsible spending, combined with this habit, improves quality of life, avoids headaches, and takes on high or unnecessary debt.
