Read Time: 5 Minutes
The world that we live in today never fails to be filled with the newest, cutting edge products or the latest in fashion everywhere we seem to look. Because of this, it can be hard to avoid losing all of the hard earned cash that we so vigorously work for throughout the week.
These traps, are designed to appeal to our instinctual desires. We as humans are attracted to the newest and the latest, especially when we see our peers around us attain those latest commodities.
This can be dangerous of course as we might unknowingly be spending money on things that we could live without. As a result, we might feel like somehow, no matter how hard we try, our money seems to slip right through our fingers.
In order to avoid losing any more of your hard earned fruits of labor, here are 5 effective ways that you can implement in your lives TODAY to save the money you earn.
1. Save 1/10 of Everything You Earn
One of the most valuable insights that I have ever gained on keeping the money you earn derives from a book called The Richest Man in Babylon written by George S. Clason. If you are looking for a book that simplifies money management in a coherent yet effective way, this is the book for you.
What Clason describes in one of his short narratives within his book is that the reason we seem to be losing money is the fact that we aren’t paying ourselves first.
What do I mean by this?
We are so quick to pay the world around us with our hard earned cash, whether it be for food, entertainment, or bills. How about we pay ourselves too while we’re at it?
Setting aside 1/10 of everything you make allows you to have a stored amount of cash which can be effectively dedicated towards money generating assets. Imagine how much you would have after a year of saving 1/10 of what you earn and what that money could create for you.
2. Make Saved Money Work for You
One of the best ways to plug the leak in your wallet is to make that saved money work for you. This is where that 1/10 comes into play. If you dedicate that 1/10 to work for you, you effectively generate more money to take the place of the money that is spent on life’s expenditures.
It is a mistake to let saved money sit idly by in your savings account as it isn’t doing anything for you. Sure it’s earning probably 0.02% sitting in your savings account but that’s barely any return at all.
Imagine what that saved money could earn for you if you decided to let it work for you in a small investment or even in the stock market. Consult an expert in whichever field you decide to allocate your money towards and then allow that money to manifest itself.
Remember: The best way to keep money is to establish multiple ways of making that money work for you.
3. Cut back on payments
There may be many of you who believe you are unable to save 1/10th or let alone any of your hard earned cash due to the fact that all of your current cash is already dedicated towards certain parts of your life.
No doubt this may be the case, however we must look at our current status of living and ask ourselves if there are any other areas in which we might be able to cut back. What we deem as “essential” may be a construct that we have generated in our own minds. Many would surprise themselves how we can still live comfortably, all while being cost effective.
When brainstorming of different ways to slash through those monthly bills consider…
- Refinancing your home
If interest rates fall, refinancing your home is a great way to cut down on one of the biggest payments you have every month. This could drastically improve your ability to set aside money for your future.
- Buy a car which takes less out of your pocket
Our car payments are no doubt one of the biggest causes of the loss of cash. Whether it be our car breaks down, needs to be serviced, or needs to be filled with gas, all of these expenditures are factors in car maintenance. Buying a car which is lesser in these categories will put much more in your wallet.
4. Create a Strict Budget
Sometimes all we need in order to save effectively is a plan, guidelines which will helpfully aid us as we maneuver through our expenses every month. This can still coincide with saving 1/10 every month as well as dedicating more of your income to other parts of your life as well.
Through a strict budget, you might decide that you would like to spend…
- 35% on play money (money used for the joys of life)
- 45% on payments and bills
- 10% on tithing or donating
- 10% saving for your future
This is of course a hypothetical situation and can be molded to whatever circumstances you might have in your own life. The point of this is to allow you to be even more strict with your budget and to be able to know exactly where your money is going at all times.
If you’d like to learn more about how to create allocated percentages for your income, I wrote an article diving deeper into the topic HERE.
5. Avoid useless expenditures
Hopefully constructing a strict budget allows you to be able to pay more attention to what you pay for on a daily basis. It should expose exactly where you tend to let your money go and who you decide to pay first in your life.
Avoiding useless expenditures can be hard of course with the consumer mindset that many of us have adopted, however with a little discipline and research, we can actually become more effective at saving.
For example, if you go and buy groceries at the store and find that you buy a specific brand that cost $5 more than the other brand which probably tastes the exact same, you should consider buying the cheaper brand instead.
These small decisions that we make in our lives no doubt accumulate over time. They allow us to expose a small percentage of our income to the possibility of being saved. Instead of paying companies for an 11th pair of shoes or the newest tech which barely makes a difference, consider paying yourself first. Your future self will thank you!
Many of these tips can be used on a daily basis and implemented in your lives TODAY. They are meant to coincide with one another to better establish your financial situations on all playing fields. Through the combination of these saving techniques, you will surely find yourself on the path towards feeling more financially structured and comfortable.
If you have any questions regarding this topic, don’t hesitate to reach out as I enjoy talking with you the reader! Also if you enjoyed or learned something from this post, a share to friends and family is much appreciated!
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Andrew Martinez, owner and writer of Minerva Money