Top 5 Money Saving Tips | Money Mentor (2024)

A good saving habit is one of the most significant traits of financially successful people. No matter how much you earn, you're most likely not to make good financial progress if you don't learn how to save.

That's why you need these money saving tips to help you build a healthy savings life.

Top 5 Money Saving Tips | Money Mentor (1)

Although there are no hard-and-fast rules to savings, you can still follow certain principles that have proven to be effective. In this blog post, we'll show you the top 5 money saving tips that can help you improve your savings.

#1. Draw a Budget

Budgeting is one of the most essential money saving tips you need to implement. It is easy to waste or overspend money when you don't have a definite spending plan. So, you need to have a well-structured budget to help you organize your spending and your savings.

While drawing a budget, consider your financial needs in their order of importance and urgency. Start from the most important and urgent ones and defer the ones you can leave for later. If you attempt to settle everything at once, you might end up exceeding your budget, have no savings, and even end up in debt.

Well, human wants are insatiable, so you can never exhaust your wants even if you spend all you have all the time. So, it is best to always ensure you set aside a certain percentage for your savings.

#2. Spend on What Really Matters

Another great money saving tip is to separate your needs from your wants. A budget helps you organize your spending in the right order of priority. But, for your budget to be effective for your savings, you need to develop the discipline to stick to your budget.

As much as you can, avoid spontaneous expenses that are not captured in your budget. It might not be easy at first, but with consistency, you get used to it.

#3. Keep Record of Your Expenditures

Most times, it is easy to overlook certain "little" expenses and before you know it, they accumulate to a huge sum. This is why tracking your expenses is a very crucial part of these money saving tips.

With a proper record of your expenses, you can identify where you need to channel more money and where you can cut down on spending. The less you spend, the more free money you can allocate to your savings account.

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#4. Automate your Savings

Even when you have everything planned out, you might still be tempted to tamper with your savings for one reason or the other. To avoid this, you can automate your savings via your bank account.

You don’t need to be tech-savvy to apply this money saving tip. You can simply authorize your bank to automatically withdraw a certain amount of money once a month or at any interval of your choice.

To make this strategy more effective, you can set up a separate account for your auto savings. If you're targeting the savings for a particular project, it might be best to lock the account to prevent you from withdrawing from it till you reach your target.

#5. Invest Your Money

It is difficult to talk about money saving tips without talking about investments. Saving your money is great, but you can let that money work for you and earn you more cash instead of keeping it idle in a bank.

There are many investment opportunities you can leverage to improve your savings by investing money. You can invest in volatile assets such as stocks that promise high returns. However, you need to be sure you understand the investment and have an effective investment strategy. This is to be sure you'll not lose your savings in an attempt to gain more.

On the other hand, you can also invest in capital assets such as real estate. For instance, you can build a house for commercial use with your savings and be sure you're making passive income from the rent.

Money Saving Tips Conclusion

Earning high figures is important, but mastering how to save is more important. Now that you know these money saving tips, the next step is to apply them. You can rest assured that if you follow these top money saving tips, you're on your way to financial freedom.

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Top 5 Money Saving Tips | Money Mentor (2024)

FAQs

What is the 50 30 20 rule? ›

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

What is the 50 20 30 savings rule of thumb group of answer choices? ›

The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.

What is the 20 80 rule Dave Ramsey? ›

There's an 80-20 rule for money Dave Ramsey teaches which says managing your finances is 80 percent behavior and 20 percent knowledge. This 80-20 rule also applies to constructing a healthy life. Personal wellness is 80 percent behavior and 20 percent knowledge.

What is the rule of thumb for savings? ›

At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.

Is 4000 a good savings? ›

Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.

What are the four walls? ›

In a series of tweets, Ramsey suggested budgeting for food, utilities, shelter and transportation — in that specific order. “I call these budget categories the 'Four Walls. ' Focus on taking care of these FIRST, and in this specific order… especially if you're going through a tough financial season,” the tweet read.

What are the 4 methods of saving? ›

Methods of saving include putting money in, for example, a deposit account, a pension account, an investment fund, or kept as cash. In terms of personal finance, saving generally specifies low-risk preservation of money, as in a deposit account, versus investment, wherein risk is a lot higher.

What are three behaviors that can help increase savings? ›

So, three actions can help you increase your savings: breaking impulsive spending habits, reducing the number of unused subscriptions, and eating out less often.

What is the 3 saving rule? ›

This model suggests allocating 50% of your income to essential expenses, 15% to retirement savings and 5% to an emergency fund. This plan allows you to meet your immediate needs and plan for the future before you spend on anything else.

What is the rule of 5 savings? ›

How about this instead - the 50/15/5 rule? It's our simple rule of thumb for saving and spending: aiming to allocate no more than 50% of take-home pay to essential expenses, 15% of pre-tax income to retirement savings, and 5% of take-home pay to short term savings.

What is the envelope method of budgeting? ›

The cash envelope system is a way to track exactly how much money you have in each budget line for the month by keeping your cash tucked away in labeled envelopes. Throughout the month, you can just peek inside an envelope to see what's left to spend—because you'll see the literal amount in cash.

How do you pay yourself first? ›

What is a 'pay yourself first' budget? The "pay yourself first" method has you put a portion of your paycheck into your savings, retirement, emergency or other goal-based savings accounts before you do anything else with it. After a month or two, you likely won't even notice this sum is "gone" from your budget.

What are 5 things to do with money? ›

The basic truth is that we can do five things with our money: (1) save it; (2) spend it; (3) give it away; (4) pay taxes; and (5) pay down debt.

What does Dave Ramsey say to do with your money? ›

Give 15% of Every Paycheck to Your Future Self

Once you're free of debt and sitting on enough savings to survive at least a quarter of a year, Ramsey says the most important thing you can do with your paycheck is to save 15% of it — each and every pay period — in a tax-advantaged account.

What advice does Dave Ramsey give? ›

Dave Ramsey's financial philosophy centers on staying out of debt and building savings. When it comes to paying off debt, Ramsey preaches the debt snowball method. The snowball method involves paying off your smallest debts first and then moving on to your biggest debts.

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