Practical and realistic tips to reduce expenses and increase your savings capacity. If you are one of those people who, like me, find it a little difficult to save or reduce expenses or maximize the little you save, don’t get overwhelmed, I will present 10 effective and, above all, realistic strategies for you to put into practice and achieve your financial goals in a given time.
1. The 50/30/20 rule
Let’s start with something basic and simple, this rule consists of organizing the monthly income that reaches us directly to our bank or payment account, this method is divided into 3 parts with their respective percentages, I show it to you below:
50% of the income will go to primary needs (food, groceries, transportation, bill payments, rent, etc.).
30% can go to personal tastes, such as going to the movies, a restaurant, or clothing, among other non-essential things.
20% is what remains and we are going to use this as savings, if we want to maximize it we can use it for investments, and in this way, this percentage that we are saving does not remain static and tends to grow over time instead of devaluing.
Several modalities of this rule change percentages such as 50/40/10, but that depends on your criteria, and of course, the income flow you have.
2. How to save if I earn little?
The key is not to save a lot but to minimize unnecessary expenses to have optimal savings, whether weekly, biweekly, or monthly. For this, we have to analyze our expenses and locate some non-essential things or primary needs to which we are allocating more money than we should. an example would be the following:
Cancel subscriptions that you do not use: This applies to streaming (Netflix, Spotify, Disney+, etc.) or also via pay television.
Reduce the amount of eating out and avoid making compulsive purchases, don’t buy things you don’t need.
Avoid offers on unnecessary items, a new device that we are not going to use soon, or some magic remedy that is advertised on TV.
By making these small adjustments we can generate super large savings in the long term, remember that the investment part must also be part of your finances.
3. What happens if I don’t have self-control over my expenses?
Simple, don’t worry, you can prepare a detailed budget, the key to maximizing your savings is knowing how much you earn and exactly how much you spend. We are going to make this easier by breaking it down as follows:
We have to include income and fixed monthly expenses in the budget. By knowing these numbers we can identify how to balance them as we saw in the previous point; get rid of expenses and thus allocate the surpluses to our savings account.
4. Plan your purchases
I know we can be very impulsive with our purchases and end up buying half a store when you only need a few things for the pantry; For these cases, I bring you an almost bulletproof infallible strategy to keep your money safe from enemy number one, You.
When we go out to the pantry or go shopping, let’s make a detailed list of what we need to buy and stick to it so as not to fall into the temptation of impulse purchases and end up filling the cart with things we don’t need, before making a purchase. Decide on a product, compare prices, and take advantage of offers and discounts to maximize your savings on each visit to the supermarket.
5. Set savings goals
It is much easier to achieve a goal if we have a fixed goal, one of the best ways to save money and learn about personal finances is to set a goal. Let’s start by thinking about what we could save, this applies to the short and long term, just as it can be from one to three years, it could be for four or more. After this we are going to decide how much money we will need to meet that goal and how long it will take us to achieve it, a quick example would be the following:
In the short term, it could be a fund for emergencies, something to keep us afloat in case of any situation from three to nine months of living expenses, you can also think about the next vacation, some people can even think about the down payment or initial payment for a car.
In the long term, a common goal would be the down payment for an asset, such as a house, apartment, some land, or a remodeling project if we already have any of those, it could also be the payment of the college for the children and, last but not least, our retirement.
If we are clear about the goal, we can focus on the objective and add little by little until we reach it, always being clear about what we want to achieve.
6. Optimize your savings by repairing broken things
Giving a second life to products that stopped working is a subtle but very friendly strategy for your pocket and the environment. Giving them a second life helps you not buy an item of equal or greater price and for a much higher price. Below they can carry out the repair or if you are skilled with repairs, do it yourself with the corresponding spare parts.
Also in case there is no composure, we can have second-hand or generic items which offer the same quality at a much lower price. You can choose to purchase items that do not need to be new, such as furniture or books.
7. Make bulk purchases
When possible, opt for bulk products, especially for your pantry. This will allow you to have discounts and save money in the long term. Also, if it is within your means, consider joining a shopping club, which offers reduced prices in the store. purchasing large quantities, although this may sound contradictory, it can be a strong element for saving in your pantry, given that for the same price (sometimes a little more) you can get a conventional item that will only last a few weeks, you can Get the same item with more content that will pay you twice as much, so you will be saving half the price of a product since you will only buy it once every so often.
8. In entertainment, look for free or low-cost alternatives
You have to explore entertainment options that can be free or with a small cost, these can range from nature walks, outdoor activities, and visiting museums on days that are free.
9. Automate your savings
We always have technology in the palm of our hand and we must make use of it. Set up an automatic transfer from your checking account to a savings account every time you receive your paycheck. This way you can save regularly and punctually, systematically, and without having to think about it so much (so you won’t regret it).
10. Grow your savings with investments, there is always an option for you
You can consider different instruments to improve your finances since in this way you will be optimizing the savings that you generate with the previous tips. There are various types of investments, from accessible amounts such as Cetes. Remember that the growth and performance of your savings may involve some risk, so it is very important that you analyze your risk tolerance. You can have low-risk medium-term instruments to start.
As you have already seen, saving does not have to be tedious, much less overwhelming, remember that a small amount in your savings can be very useful for tomorrow, and maintaining good health in our finances brings us peace of mind, so the decision Saving is up to you. There are many methods to save and maximize every peso you can have, so there is no excuse to say that you can’t do it, on the contrary, there are many options to do it today.