How to save some extra money from your monthly salary or expenses
In this hub I will explain how I have been able to save extra bucks each month by carefully examining my expenses using simple techniques for saving. Earlier I never used to keep track of my expenses and never know much much extra I was spending every month. But ever since I have started using these simple techniques to manage my finances, I have been able to save extra 10% every month.
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Save extra bucks every month
Plan monthly budgetYou should plan your monthly budget about how much you should spend that month. As this may take at least 1-2 hours, it should be planned on first weekend of every month. A simple balance sheet should be enough to do this exercise. On left hand side, list all the sources from where money is coming in. This could be your salary, interest from bank account, rent income from your properties, etc.. On right hand side should come all your expenses. Difference between the two is what you should save every month. Before providing details of your income, expenses and saving into your balance sheet, let discus them one by one.
Know your income sources:
This is the first input to your balance sheet and also the most important one. You should be absolutely aware of how much you are earning each moth. Normally we take this information for granted as we are always sure of our income which may not be the case all the time. For example if you are a salaried person like me, you may consider the monthly salary as the only source of income which may not be true. As I said there may be several other source of income like interest coming from your money in Banks saving account, monthly rent from your properties, some friend returning money he borrowed from you long back, revenue generated from online activity like blogging, lottery and list can go on.. Its very important that all those source and amount should come on your balance sheet. Once you are sure that you have accounted all your income, we can move to the next entity. Before we move on, as I said that income is the most important thing on your balance sheet, we will come back to this again at the end of this hub.
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Decide how much you want to save
You must be expecting expenses to be the next on the list, but don't you think savings are more important as this is what this hub is written for. Yes, its very important to keep in mind how much you want to save. This is sometime very tricky to find out as this depend on many factors like your age, marital status, your life style, your future plans like how early you want to retire, if planning to buy a house or a car etc. Let me help you a bit by providing some simple guideline which is very generic and may differ person to person. For example, if you are young (less than 25) and not married, you should be saving at least 50% percent of your earning. If the remaining 50% is not enough for your monthly expenditure then you should seriously think about increasing your income. If you are 25-30, married and spouse is not earning, then you should be saving at least 25-30% of your income depending if you have a kid or not. And if you are 30-40, married and have kids going to school, you should be saving at least 10-15% depending on number of kids. After 40 till you retire, you should be saving 10-15 %. These are just guidelines and actual situation may vary case to case. But you can still plan your saving along these line.
Minimise your spending
You should always looking for ideas to make cuts in your spending. Once you have jotted down all you spending areas in the balance sheet, then try to look ares where you can remove the wasteful spending. Once you are done with that, then try to find out areas where you can do some manipulation to bring down the spending. For example if you are spending to buy a expensive brand of product, try to find out alternative brand which is as good but cheaper than your favourite brand. Look how can you minimise you expenditure from bundling products than buying them separately. For example its saves money if you buy a bundle of cable TV, broadband and phone rather than buying them from different vendors separately. If you are single and living alone, its cheaper to live in 1 bed apartment than renting 2 bed. Buying or renting home nearer to office saves transportation cost. There are many ways to cut cost by just thinking about them for 10 minutes every month.
Once you have one with all your thinking and completed your balance sheet, you will have clear picture of how your are going to spend entire month. As I promised to come back to income at the end of hub, I am compelled to think that it will take another hub to talk about income and its various attributes. I will write more about how we can increase our income by using simple techniques so that we can plan our retirement early.
I hope this hub help you save something extra everyday. If you like this hub or if you have any suggestions/comments, please feel free to comment below.