There comes a point in life when you notice you’ve grown up, you depend on yourself. The millennial generation has been criticized for not taking life seriously, in spite of everyone’s life going so fast.
Living day to day in economic terms is definitely not ideal. Who likes getting to the next paycheck with barely enough for transportation and meals? The ideal situation is managing your money, paying your bills and saving a little bit for any surprise expenses. However, for many people saving represents an issue because more than a benefit, it’s perceived as a sacrifice that brings economic plight.
According to the National Interview for Economic Inclusion 2015, up to that year, only 31.1 million people in México save for their retirement; that’s only four in ten Mexicans.
The important thing is learning there’s nothing to fear in saving, as, even when it means losing out on some things, in the end it’s a great benefit in the face of unforeseen circumstances such as unexpected increases in the cost of products, medical issues or even getting fired.
The question is, then, how should I save?
Income and expenses
The first thing, according to René Cárdenas and Mauricio Mastropiero, authors of the book ‘’Querido dinero, ¡te odio y te quiero!’’, is understanding how much money you earn and spend. For this you must identify your incomes and expenses.
Your income is any money that goes into your account, including monthly wages and extras, like yearly bonuses or utilities. For some people, using yearly budgets instead of monthly ones works better. You get this by identifying your monthly income and multiplying by 12.
On the other hand, an expense is any amount of money that comes out of your account and can’t be recovered. Some examples include bills like electricity, internet, water, etc.
Based on this, now you can know how much money you can spare every month to spend, be it on plans with friends, costly meals or simply a splurge purchase for yourself, always remembering to keep a little money aside. These will be your savings.
A very simple way of saving money without noticing is eliminating those expenses that you don’t need, like impulse purchases that made no sense in hindsight.
You’ve probably more than once made unnecessary expenses like that Starbucks drink you buy every morning in spite of the free coffee at the office or the snacks you buy on Fridays, even if you brought lunch from home.
We’re not telling you to forego that Caramel Macchiatto that makes your day start with more optimism, but if you get one every day, you could reduce that to a couple per week and you’ll start seeing how these $150 extra will be of great help to get to your next paycheck.
Another important point are sales. A lot of times we get swayed by colorful signs announcing discounts for products we don’t need, but which we get by the double just because they’re cheaper today.
We recommend that when you see something like this, think whether there’s a real discount, because a lot of stores increase their prices before and then announce a sale that ends up costing the original price.
These are the expenses you don’t see, but are always present and when you put them all together, they become quite scary. An example is your renewing Netflix subscription on your credit card. You don’t know when they charge it, but you notice it when you have to pay your total.
Another example are very small purchases like loose cigarettes or chewing gum, even tips when you go out to a restaurant or bar.
If you’re conscious of these expenses and reduce them, you’re sure to save some money.
Save according to your lifestyle
When you go out, you can also watch your spending. Going out one weekend and staying home the next, believe it or not, can represent big saving, considering drinks can set you back $200 – 500 every weekend.
A very important topic is knowing what you want to save for. If you only want to sleep calmly knowing you have spare funds in case of an emergency, you can probably be more flexible with your expenses.
But if you want to save for a car, to pay for a second (or third) language or a specialty in college, you better have a clear plan so you can take the next step.
Set a goal
Our recommendation is setting a goal for your savings. It’s complicated, we know, but having a goal will make it more likely to meet it. The problem with saving is that we’re not used to doing it, but you can start with small amounts that don’t alter your habits too much.
For example, if you earn $10,000 a month and have fixed expenses of $5,000, you can set your goal at $1,000 a month, which you can put in a savings account. You’ll have $12,000 saved and will be used to saving money, which will make it easier to save in greater amounts.
Another way of saving is taking your monthly income, subtracting your monthly expenses and then subtracting the amount you want to save. After this, you’ll know how much money you have available for other activities.
Finally, if you’re all about practicality, there are many things you can do: leave your house with a small amount of money, whatever you need for transportation and meals, so you can’t spend more than that.
Collect all your coins at the end of every day. All loose change you get at the store, from the person watching your car or when you buy your subway tickets, collect it instead of buying loose cigarettes or chewing gum.
If you get money for your birthday, don’t spend it all, or save it compeltely. If it’s too much temptation, spend half and save half, so you have an unexpected extra that can help in the future.
There are countless ways of saving. Some are conscious while others can happen in ways you don’t notice, but none will work unless you make the decision and use your willpower. Remember we live in a world where prevention is fundamental, as none of us is safe from losing a job, having a medical emergency or even some unexpected vacations. It all depends solely on you.
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