You have already taken the most crucial step to save money month by month, and it is to look for information on how to do it. Therefore, I have spent days preparing this mega guide on savings, in which I will teach you to step by step everything you have to do to save money.
I warn you; you will not be able to read it in five minutes because I will not give you two magic secrets to start saving money every month since that does not exist. Of course, if you read it entirely and apply it, I assure you that your monthly savings level will increase significantly.
In the article, you will discover how to save money step by step, and I will surprise you by showing you how small savings that seem insignificant can change your life. In addition, I will tell you tricks to save money day by day, and I will tell you what you have to do with the money you save to make the most of it.
Control your expenses
It is impossible to optimize savings if you don’t know how much you spend precisely and on what. Therefore, you must spend at least 2 or 3 months writing down all your expenses in a spreadsheet in Excel.
If you are more technological, I talk about a savings application to automatically keep track of your expenses. It may seem like a lot of work, and it is. But I have told you before, the answer to how to save money is not to apply some magic tricks; it requires effort. Nothing good is easily achieved.
Once you have all your monthly expenses, you can group them into categories to have an overview and sort them by priority. The best way to save is to eliminate unnecessary costs of those that do not contribute much.
So, you can see how to control your expenses practically. Here are two real examples of people I know who have already managed their expenses. I have taken these examples from my book, Investment and money management, available to everyone.
I will analyze them thoroughly and give my opinion on when these people could spend less to save more money.
Set your savings priorities
Going out to dinner outside once a week can be essential, and for others, it can be silly but going to an expensive gym is a necessity.
All positions are equally respectable; what is not possible is that everything is a priority. If all expenses are considered a priority, it will be impossible to save and leave the rat race for many years to work, so we all must have the costs in section C and be willing to cut them if necessary. If you now run out of work and must live with $ 1,000 per month, you could surely miss here and there and get it, so you can also without losing your job.
Start little by little, eliminate some expense of those who do not contribute anything to you, and you will see how at the end of the month you have an extra saved and you have not missed that expense at all. I used to order takeout several times a week, assuming enough money at the end of the month. I currently control myself (it costs me, like everyone else), and I ask for a maximum of once a week, saving good money at the end of the month.
This control applied to different expenses can be the difference between spending more than what is earned month by month or saving hundreds of euros. It is not about eliminating all small pleasures and living like a poor person, but about moderating with expenses and not living like a rich person without being.
Do not buy on credit; plan your savings
Living on loans and borrowing more and more is very common, but you should avoid it at all costs. Twenty years ago, people asked for a loan to buy a house, which they used to pay in about ten years, quite a reasonable figure. To buy televisions, computers, or go on vacation, you had to save until you had the money for it, something that is not necessary today.
Before, people who did not have money to go on vacation were left without going, saving that expense, and going the following year.
Now someone who cannot go on vacation has no problem asking for a loan to get it, which implies the use of credit. Things bought on credit cost much more because of interest rates.
Prepare a domestic budget
An excellent way to save more money is to prepare a household budget, a budget that considers all your expenses and how much money you can dedicate to each category. My advice is not to prepare the budget now, as it will be too theoretical.
If you don’t know how much you spend on average, you cannot make a realistic estimate of how much you would like to spend. My advice is that you first control your expenses, as I have told you before, and once you are clear, you get the budget later.
Making a household budget is not difficult. You must decide how much money you want to spend a month or a year on each thing. Since you don’t have to do it now, I prefer not to tell you in detail how to do it.
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