Mastering budgeting is the cornerstone of personal finance, albeit a challenging one. However, fret not! In this article, we are sharing some clever tricks to aid you in managing your expenses effectively. By implementing these strategies, not only will you be able to monitor your spending closely, but you’ll also discover that saving more comes naturally when you spend less.
Without further ado, here are six personal finance hacks to help you save more:
1. Golden ratio: Simplifying budgeting, this rule advocates for allocating income to cover past, present, and future needs. Reviewing your monthly expenses over the last six months offers insight into how much of your income should be allocated to debt repayment, current expenses, and future savings. Ideally, this ratio should hover around 10-60-30, meaning 10% for debt repayment, 60% for current expenses, and 30% for future savings.
2. Tandem saving and spending: Contrary to popular belief, saving and spending can coexist harmoniously. When making discretionary purchases, match the expense by setting aside an equivalent amount into your weekly savings fund. This practice underscores the impact of small savings and enhances your awareness of spending patterns. Particularly beneficial for individuals new to earning, this approach instills mindful financial habits from the outset.
3. Wage weighing: Before purchasing non-essential items, consider how many hours you would need to work to afford them. Calculate your labor rate by dividing your annual gross salary by the total number of hours you work in a year. This approach enables you to better understand the true value of your money and helps curb impulsive spending habits.
4. Cash stuffing: An age-old trick, cash stuffing involves using physical currency, which proves effective in curbing impulsive spending. Allocate specific amounts for different expense categories, place the cash in separate envelopes designated for each category, and utilize only this cash for corresponding expenses. By tracking the cash leaving these envelopes, you gain clear insight into your spending habits, ultimately facilitating greater savings.
5. Power of pause: The next time you’re browsing through an e-commerce site, refrain from making impulsive purchases. Instead, add the item to your shopping cart or wish list and allow it to remain there for a few days or even months. If you still desire the item after this period, it’s likely a worthwhile investment. This strategy enables you to evaluate whether the purchase aligns with your budget and fulfills genuine needs rather than mere wants.
6. Sinking funds: This strategy involves systematically saving for a significant planned expense in the future. Whether it’s purchasing a car or embarking on a European vacation, allocate a portion of your monthly income toward various spending categories required for these future endeavors, such as vacations, vehicles, or home renovations. Divide the total amount needed by the number of weeks or months until you require the funds, and commence saving towards your goal accordingly.
By proactively saving, you can alleviate financial stress when the need for the funds arises.
The above content is compiled from a video that appeared on Economic Times.
Without further ado, here are six personal finance hacks to help you save more:
1. Golden ratio: Simplifying budgeting, this rule advocates for allocating income to cover past, present, and future needs. Reviewing your monthly expenses over the last six months offers insight into how much of your income should be allocated to debt repayment, current expenses, and future savings. Ideally, this ratio should hover around 10-60-30, meaning 10% for debt repayment, 60% for current expenses, and 30% for future savings.
2. Tandem saving and spending: Contrary to popular belief, saving and spending can coexist harmoniously. When making discretionary purchases, match the expense by setting aside an equivalent amount into your weekly savings fund. This practice underscores the impact of small savings and enhances your awareness of spending patterns. Particularly beneficial for individuals new to earning, this approach instills mindful financial habits from the outset.
3. Wage weighing: Before purchasing non-essential items, consider how many hours you would need to work to afford them. Calculate your labor rate by dividing your annual gross salary by the total number of hours you work in a year. This approach enables you to better understand the true value of your money and helps curb impulsive spending habits.
4. Cash stuffing: An age-old trick, cash stuffing involves using physical currency, which proves effective in curbing impulsive spending. Allocate specific amounts for different expense categories, place the cash in separate envelopes designated for each category, and utilize only this cash for corresponding expenses. By tracking the cash leaving these envelopes, you gain clear insight into your spending habits, ultimately facilitating greater savings.
5. Power of pause: The next time you’re browsing through an e-commerce site, refrain from making impulsive purchases. Instead, add the item to your shopping cart or wish list and allow it to remain there for a few days or even months. If you still desire the item after this period, it’s likely a worthwhile investment. This strategy enables you to evaluate whether the purchase aligns with your budget and fulfills genuine needs rather than mere wants.
6. Sinking funds: This strategy involves systematically saving for a significant planned expense in the future. Whether it’s purchasing a car or embarking on a European vacation, allocate a portion of your monthly income toward various spending categories required for these future endeavors, such as vacations, vehicles, or home renovations. Divide the total amount needed by the number of weeks or months until you require the funds, and commence saving towards your goal accordingly.
By proactively saving, you can alleviate financial stress when the need for the funds arises.
The above content is compiled from a video that appeared on Economic Times.
