Savings and Budgeting:
Effectively managing your finances helps to ensure you are making the most out of your money, while avoiding unnecessary expenses. It can allow you to plan for and pay off your debts, as well as providing the opportunity to set aside money for particular goals you wish to achieve.
A simple way to start saving is to develop a plan.
Where am I now?
Before you start, you need to establish your current financial position – what you earn (income) and how much you spend (cost of living and debts). The amount left over is the potential amount available for saving.
Creating a budget is a sound money management principle and will allow you to accurately assess your expenditure and savings on a regular basis.
Where do I want to be?
When identifying your objectives, remember your short, medium and long term priorities. If you are new to saving, start gradually by establishing a small goal that requires minimal funds. Set a timeframe and a specific amount from each pay to reach your target.
When is the right time to begin saving?
Most of us know the importance of saving, however many procrastinate for months or even years.
The bonus of starting early is the benefit of compound interest. Compounding is when you reinvest the dividend or distribution you earn on an investment. Over the years, the reinvested earnings will generate additional capital.
Getting into the habit of saving and following a budget can help you achieve financial security now and in the future.
Tips on saving and budgeting:
- Don’t make your budget so stringent that it is impossible to maintain.
- Set realistic goals and a flexible budget.
- If you fail to stick to the budget in one month, try to make up for it the next month.
- Give yourself small rewards for each goal you achieve.
- Regularly review and modify your budget.
- Establish a regular investment plan.
Saving and Budgeting can allow you to successfully manage your money.