Working hard for your money is a must in modern-day society. However, too many Canadians find themselves living paycheque to paycheque, with little idea of how to make the most out of their hard-earned money.
Britain’s top money-saving expert, Martin Lewis, has made his career telling his fellow Brits how to save money. In an interview with dailymail.com, he addressed some of the ways people can find savings.
“The big picture is just too scary. So, if you look at the small picture, go to every single thing that you spend money on and, first, ask yourself, ‘Can I do it cheaper and the same way,” said Lewis. “And, then, even ask yourself: ‘Do I need everything I’ve got? What do I need? What can I reduce? The more income you have, the more stuff you do, the more you can save.”
Here are 6 ways you can begin making the most out of your money and increase your savings.
Keep track of your expenses
One of the first steps to better managing your money requires you to find out how much you actually spend. Keep track of all of your expenses – every coffee, household item, and of course, your monthly bills. Record your expenses in whatever way is easiest for you, whether that’s a pencil and paper, an excel spreadsheet, or a free online spending tracker/app. Once you have the data, organize the numbers by categories, such as food and fuel expenses, and total each amount. Also, use your credit card and bank statements to make sure you’ve recorded everything.
“Do not save what is left after spending, but spend what is left after saving.” – Warren Buffett.
Create a savings budget
Once you have an idea of what you spend in a month, you can start crafting a budget. Your budget should show what your expenses include relative to your income, so you can plan your spending and limit overspending. Be sure to factor in expenses that occur regularly, but not every month, like car maintenance. Including a savings category in your budget and aim to save a determined amount that feels comfortable to you. Plan on eventually increasing those savings by 15-20 percent of your income.
Invest
Investing early on is a great way to take your money and make more of it. Investing ensures your present and future financial security. It allows you to grow your wealth while, at the same time, generating inflation-combating returns. You can also benefit from the power of compounding over time.
Matt Choi, the founder of Certus Trading, uses his years of experience to help educate people on the art of investing. Choi shared his views on the importance of investing and his experience in an interview with techcompanynews.com.
“What it means is you have to dive deep and understand what you are doing, be a specialist if you will,” said Choi. “Most traders trade this and that with zero focus.”
Set savings goals
The best way to put the plan into motion is to set a goal. Start by thinking about what you might want to start saving for, both in the short and long term. Then, estimate how much money you’ll need and how long it might take for you to save it.
Typical short-term goals can include an emergency fund, vacation, or a down payment for a car.
Typical long-term goals can include a down payment on a home or remodeling project, as well as your child’s education or retirement.
