How to can become financially independent in the future, travel without borders, or maybe retire early? This question worries not only Americans but also thousands of people worldwide. We are talking about the military, teachers, politicians, and other enthusiasts. Let’s analyze in detail 5 methods and find out the effectiveness of each of them.
Records for Expenses and Income
To save money, people should revise their financial life to find out their strengths and weaknesses. Without this, the desire to get rich is unlikely to be realized. This applies not only to company owners but also to ordinary citizens. How could they make themselves useful and financially independent? Let’s start with detailed monitoring of expenses and income.
Making a Family Budget
Your family plan covers 4 key areas: liabilities, assets, expenses, and income. Try to describe all items in as much detail as possible. Although this is not the only condition. Making a budget work is a good communication among family members. If you do not have the opportunity to immediately calculate your expenses, just use Excel or a Notebook. With such software, people can write down all their checks for 1-2 months. So your records look like this:
|Liabilities||Simply list here all mortgages, cash loans, 0% installments, rent (unless you separate corporate and private finances), and tax debt. It is better to indicate each amount and calculate the total liabilities. People should order a statement at least 3 months in advance to understand how much bank services cost. In this case, it is easier for them to see the overspending.|
|Assets||Real estate, investment funds, stocks, company shares, bank deposits, cash, savings accounts, gold, and silver.|
|Expenses||Rent and utilities, food and clothing shopping, entertainment, sports, education, etc. For this category, you are most likely to find ways to prevent overpayment.|
|Income||If you have any sources of income outside of your main occupation, even small ones, this section should be included.|
According to experts, 70-80% of the entire population of the Earth has problems of lack of money. The reason for this is financial illiteracy. It’s a huge problem in some countries. Most educational institutions (schools, universities, etc.) teach a lot — chemical formulas, forest survival tricks, communication psychology, geography — but not the basics of finance. A piece of knowledge in this area directly affects the standard of living of citizens. Their well-being could improve if they knew the secrets and spent the budget correctly.
Select the Purpose of Savings
By making their goals visible, people keep themselves motivated to save money. To stop blaming your low standard of living, counting pennies until the next salary, and denying yourself many little things, you need to know secrets. Some people acquire the necessary knowledge through trial and disappointment but you should not do this. If you are still tempted to make that €500 impulse purchase, you must remind your savings goal. Here’re several savings opportunities:
- Save on electricity bills. Compare suppliers, and check if you can buy cheaper from another company. Take action to save energy — install solar panels so that your electricity bills are significantly lower.
- Save on impulse purchases. Never decide to buy within 2-3 hours. Thinking about expenses throughout the day helps people not to rush to buy unnecessary things and spend a lot of money on them.
- Save on insurance. Take a critical look at your insurance policies. Find out which policies you need and which ones you can do without.
Make Expenses that Generate Income
Effective investing is one of the best ways to save money. But that doesn’t mean it’s easy to make a profit. Some entrepreneurs spend a lot of time doing things that don’t bring them much (or less) money. For example, people are feeling difficulties writing blogs or managing their administration and it costs them a lot of time each month. Such entrepreneurs are wasting 5-6 hours on this activity that they could also work for someone else to end up earning more.
For novice investors who are not ready to get into the high risks, bonds are best suited. The cost of such assets starts from $100. In this case, even ordinary citizens can become an investor. It’s as simple as buying cryptocurrency. Just look at ICOholder statistics to understand how it works for different assets. With this platform, people will clarify all the details. When investing money for a long time, keep in mind that assets may depreciate due to inflation.
Stocks are a more profitable but also more risky tool. Moreover, you will need additional permissions. Although you can turn to intermediaries. The advantages of ETFs are a low entry threshold and the ability to invest in several companies at once. The funds are managed by financial market professionals, so private investors do not have to independently monitor the quotes of individual companies.
Consolidation of Loan Payments
Monthly obligations can be huge. In most developed countries, banks willingly give loans for various needs — buying a car, building a house, education, and so on. This means that the percentage of the deduction can reach 60% of the salary. But there are ways to prevent overpayment in favor of the bank. All people have to do is consolidate the loan payments and thus reduce the amount of the payment they have to pay each month. Get in touch with a consultant and discuss your options, and you may have lower fixed costs in a moment.
Thoughtful Shopping — Reduce Your Food Costs
Plan your weekly shopping, starting with viewing promotions. Think about what meals you can cook with discounted products and make a list for 5-7 days. Convince yourself to visit online stores. With a shopping cart, when people go over budget, they can quickly remove food from the list.
When shopping online, it’s also worth looking for discount codes. Most sellers offer promotions, no refuse such a way to save money. Also, think about what foods you can cut out completely. Sweetened drinks or sweets are not very healthy. If you stop buying them, your wallet, body, and figure will thank you.
Saving money without a goal, you would quickly abandon what you started, or spend all your funds on some unnecessary thing. So, people need to be meticulous and have willpower. To save a certain amount as quickly as possible, just decide on the goal and set the deadlines for achieving it. If you strictly adhere to the principles listed above, the venture will certainly be successful.