1.Use only cash for two weeks or an entire month
Using cards in your daily life and paying often blurs the line between what you can afford and what you can’t. Credit cards, in particular, do this very easily.
Instead, take all the money you need out in cash and only use cash for 2-4 weeks.
This is how you learn to see how much money you are actually spending and where it is going. This kind of thing will also help you understand how easy it is to spend money.
You may start to think about your purchases again when you can’t use the cards to pay for them at all.
2.Be aware of your spending
Some studies have shown that people spend about 15% more on their purchases when using a credit or debit card compared to cash. When you use the cash, you will notice how money literally slips out of your fingers.
So by using cash, you start automatically being more aware of where your money is really going.
To become even more aware, retrieve a receipt for every small purchase. Even small purchases of a few euros add up to a large sum when they are all added together at the end of the month.
By looking at receipts, you start to understand where your money is going and how much money you’re actually spending. So use cash and collect receipts until you really understand how you spend your money.
3.Determine where your money is going
To improve your spending and even start saving yourself money, you need to know exactly where each euro is going. At this point, you are already using cash and collecting receipts.
The third step is to bring up a small note on which to write down all your purchases. Whether shopping for a small bar of chocolate, dog food, renting, or even a phone bill, write them all down to a penny. Also, be sure to write down the date!
Keep track of all your expenses from two weeks to a month this way. At the end of the period, you can keep track of which category you spent the most money on.
You can also calculate how much you would save per month if, for example, you continue to make coffee at home or visit clubs less often.
4.Create a budget for yourself
Creating a budget is the easiest way of managing your own finances, but very few end up relying on a budget. Creating a budget is very easy.
By this point, you’ve already picked up receipts for your purchases and written down your expenses, so it should be straightforward to be able to create a fairly accurate budget.
First, write down all your own income. All income from wage income to passive income and subsidies should be recorded. Then deduct from this amount all your expenses. The receipts you recover at this point are handy.
If you already noticed when you used cash that you could spend less money on coffee and put money into savings instead, plan your budget accordingly.
Also, consider whether there are certain specific expenses that you can deduct from your budget altogether.
5.Think about what expenses you can save
While it may not be possible to cut costs completely, you can start saving on regular costs. For example, you can wash your laundry with cold water instead of hot, turn off the lights when you leave the room, turn off the air conditioning, and so on.
Maybe you can switch your regular subscription to prepaid or even shave less from one place to another.
Also, be sure to make sure you don’t pay for things you don’t have to pay for. Call your own insurance company and ask for an insurance discount.
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