You receive a salary that is more than enough for yourself. You save 30 percent of that amount in the bank and spend the 70 percent on needs and some wants. That's the 70/30 rule of savings. To date, this strategy has been an effective method of saving money and it has saved a lot of individuals like you.
Saving Half the Money
Now moving on, how do you take that savings up a notch? That's easy. Do you find the 70 percent “to spend” budget still a bit more for your basic necessities? When it comes down to basic needs, you can still cut back on your dine outs, shopping and other overrated “wants”. Party and friends may be the thing right now, but saving for your future is way more important.
This strategy can give you 50 percent buffer on your salary to save in the bank. Imagine how fast that amount can grow at your rate. Here are incredible powers you can gain from saving 50 percent.
Live on One Income
Working double time for extra income will allow you to enjoy the benefits through traveling and buying some of your desired stuff from time to time. It may seem like the only way right now, but the truth is that you can actually enjoy the same things if you save half of your money.
For instance, instead of living the same spending lifestyle through extra income, cut back your unnecessary expenses and save half of your basic income. This way, you still save the same amount of money while not having to work the extra hours – allowing you to take a rest and enjoy more time for yourself or family.
Boost Your Income
How can one boost their income through regular pay checks? The answer is easy: investments. Investing money on “good investments” are the easiest and most convenient way to increase your net worth while you sit back and do whatever it is that you regularly do. You can maintain your regular job while you allow your money and savings to grow through your investments. Before you know it, you are rich enough to travel around the world.
Focus on Big Wins
There are two types of people: the consumers and the income-driven people. Guess which one of these two have more savings? While there is nothing wrong with pampering yourself and going on a shopping spree with your hard earned income as long as you save some for your needs and your future, it would be so much better to look at the bigger picture.
How do we look at the bigger picture? Take for example feeling the urge to buy yourself an expensive purse. You just received your pay check; you already bought your basic home needs; you already saved 20 to 30 percent of your salary in the bank. You have four purses at home. Given this situation, consumers would find a way to reason out why they need this purse. Income-driven people would rationalize and think that they have four others at home, they’ll keep the money for the long haul.
In the end, the consumer spent got what they wanted that day and the income-driven people have added more for their future.
Some people struggle with managing their income, especially if the expenses are too high. Some people do not worry about money management. Bottom line is that it is all about management – knowing your priorities and focusing on the needs.
When it comes to saving half of your income, money management plays a huge role. It starts by listing down the necessities and prioritizing them. Food, water, electricity, rent and clothes are the most basic. Next are the items you can weigh and compare such as entertainment subscriptions, auto insurance rates and/or electric consumptions which are items you can cut back or control to leave more for your savings.
Target Your Recurring Costs
As what was discussed on item number 4, it is all about managing your money. Recurring costs are basic needs and regular items that you pay on a monthly and annual basis such as bills, insurances and home necessities. These are the most basic that, in most cases, may not be cut down anymore. The best strategy to save money even from your basic necessities is to learn the art of comparison.
Comparing the brands, labels and benefits they can give you is helpful enough so that you know you are getting your money’s worth. Sometimes, the same benefits can be offered through lower rates, thus allowing you to save more.
You know what they say – work until your bank account looks like a phone number. It is one measure of your personal success and it will make you feel confident and self-sufficient. For after all, you save money to secure your future, and your future happens tomorrow, every day.