A good and effective tactic to start saving money is to establish a goal for a month. This goal could be to save a certain amount of money in a particular month or refrain from a certain expenditure like eating outside or shopping for clothes. If you are just starting out with establishing the savings plan to yourself making small monthly goals helps you get on the track. The ideal situation is to save 20% of your net income of 75% of your disposable income every month. You should be able to put this money away in your savings account and then not touch it. Once it’s in your savings refrain from digging into it for casual expenditure.
Making monthly goals of saving money by not spending on any one particular activity will help you save money that you never thought you had. Many of us keep making casual expenditures and by the end of the month lose track of how much we spent. This is especially true if we are not in the habit of writing down each and every expense that we make in a day. Most of us don’t. Once you realize how having one simple goal can make you save money you can compound on this ideology and start saving much more by cutting down expenses on other activities.
Discuss the monthly goal with your spouse or whoever is a part of spending your income. Make the goal a part of your daily living and expenses. Not only will this change your way of thinking but also make you realize that you can come up with surplus money by yourself. This money can utilized in making you completely get free or for the primary expense for some utility or items that you really require and never had the money for.
It is however recommended that you use your budgeting habits to build up a cash reserve. We shall discuss more about building a cash reserve in the next post.