7 Simple Steps to Save A Fortune

Save A Fortune

If you want to be financially independent, you’d better be willing to start budgeting.

Budgeting is a little bit like being in a jungle. In a jungle you have to cut branches, lianas to move forward so you get through. For your budget that’s exactly the same! You have to cut expenses to get by and thrive.

I know budget seems boring as hell. I used to think that too.

Some years ago when coming across articles on how to budget or the importance of budgeting…I used to avoid them because I believed at that time that only people in debts had to do it. As I wasn’t a big spender I thought that I didn’t need to do that. How stupid I was!

I learned later on that budgeting could save me A LOT of money (even as a student). I am talking about hundreds even thousands of dollars every year here.

So I started getting interest in the topic. I thought that the money saved might be used for my future investments. So I started to look for every single tricks and information to make that saving per year.

It takes discipline, planning and prioritization, that’s true, but it’s totally worth it!

As I know that planning might be confusing, I am going to give you 7 basic steps. If you follow them you might be surprised of the money you could save!

1) Set a goal

The first step for budgeting is to set a goal.

You want to know how much you want to save and by when. Set deadlines, milestone, whatever your call it, on your calendar.

At that point you also need to picture the benefits of saving that money, that’s crucial! If you don’t do it you will follow the steps by dragging your feet, you will make 2 steps forward 3 steps back.

So make a list of the things you could do with that money saved (if you want to be financially independent think of the investments you could make and the snowball effect you would get over time).

2) Know your income

At that point you want to be as accurate as possible. Only take the income that you bring home. It should be based on your net income (after tax, insurance, pension and other contributions).

3) Determine your basic expenses

The basic expenses are the ones that don’t fluctuate or change dramatically.
For example that could be a house mortgage, a rent, car payments, car insurance, student loan…

4) Determine expenses that vary each month

They are costs you have control over. For example that might be your phone bill, the grocery bills, the clothes you buy, the restaurant, and entertainment…

5) Determine what’s truly important

This step is certainly the most important. Start digging into variable expenses and find what’s most important to you. If you have 400 channels on cable, unlimited messages…do you really need it?

There are mainly 2 kinds of savings you can make:

The small savings:

That seems rather obvious but make a list at the grocery store. Define each meal you will prepare during the upcoming week for example and stick to it! If you don’t do that list you will be more likely to buy products that you don’t need or that doesn’t really feed you. Marketers make study to know how customers behave in grocery stores. They know how to get you to buy more expensive products. Having a list will help you focus on your budget.

Take also the discount coupons, shopping cards…

The big savings:

Did you know that the average monthly bill for cable in the US is $86? That’s $1032 a year! You could save a lot here! There are some tricks to do it. You can for example watch your program on Internet, downsize the number of channel, or bundle your Internet service provider with TV cable, landline and internet.
Speaking about landline, get rid of it! No but seriously you pay for the landline and for your cellphone. You don’t pay for the 2 exact same pair of shoes; so don’t pay for 2 telephone services.

You can also save on your mortgage or rent. Keep an eye on the rates if they drop or are lower than the current rate. Also consolidate the debts so that you can pay it more quickly (one bill will save you interest every month).

6) Follow your spending and review monthly

7) Keep track balance your budget

You can use the traditional pen and paper or download some good smartphone applications that I talked about on my free report down this article. You can also use the NFCC Budget Worksheet here.

Simon Cave

2 comments… add one
  • Sharon December 21, 2013, 11:29 am

    For me Know your income is the first step to understanding and reducing your spending closely followed by Knowing your debts and the actual amount that you owe. Then you are able to set realistic goals for the future.

    Reply
  • The Becomer December 28, 2013, 3:20 pm

    Thanks Sharon for your comment! That’s funny you mention it because I hesitated for a while before placing “Set a goal” first. But you’re absolutely right “Know your income” can be first in that methodology.

    Reply

Leave a Comment