The New Year is here with us and as it is always a norm, we come up with resolutions that we look forward to achieve as the year progresses. Without a doubt, financial freedom will find its way at the top of the list given that it is key in living a comfortable life. But the reality is that you will only achieve financial freedom after learning and embracing healthy financial habits. You do not need everything to magically line up perfectly in order to keep your finances on track this year since there are a number of practical ways that if well adhered to can help you achieve your 2021 financial goals.
Here are some tips that will help you to boost your saving culture in the course of the year not only for your short-term goals but for your long-term goals as well:
- Make a budget
At the heart of any savings plan is a budget. Budgeting helps you prioritize your expenditure and find a balance between spending and saving. By checking your credit card statements, bills, banks statements and receipts, you can work out all your regular expenses, such as your rent, transport, school fees, utility bills or even insurance. Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income, this way you can plan your spending and limit overspending. Remember to always update your budget at least once a year or more frequently if your circumstances change significantly
- Live below your means
As far as budgeting is concerned it is important to live below your means by not spending more than you earn. It is advisable to always note down all your monthly expenses and stick to the budget. Learn to prioritize what is important while at the same time cutting down on expenses that you can do without. Think about which items you need for your basic living expenses and which are extras or things you could do without if you needed to save some money.
- Clear Your Debt
Achieving financial freedom and keeping your money on track will need you to pay off all the debt that you might have. There is no way you can consistently save money while being on debt. Clear all the debts under your name so as to start off on a clean slate. Add up how much you spend servicing your debt each month, so as to get understand how long it will take you to clear all of them.
- Track and record your spending
Most of the time we tend to think that money spent on big expenditures blocks us from achieving financial freedom but in a real sense, other than the basic expenses, we spend a lot of money on some minor expenses that pop up here and there which end up costing us more. This is why it is important to keep track of your day-to-day spending so that you are not living beyond your means. Your bank statements, for a start, will tell you how much money is going into your bank account, how much is going out and where it is going. You can then compare it with your budget to see whether you are sticking to it or not.
Just the thought of having to track your spending can ward off impulse purchases. Once you have your data, organize the numbers by categories such as gas, groceries, transport or even mortgage and total each amount.
- Open a savings account
By restricting access to your money, savings accounts can give you a higher interest rate than a basic transaction account. One way of avoiding the temptation to spend this money meant for saving is through setting up automatic, scheduled transfers from your main account to your savings account. At Family Bank, we have various saving accounts to suit your particular need like the Tujenge Account for emergencies. You can choose when, how much and where to transfer money or even split your direct deposit so a portion of every paycheck goes directly into your savings account.
Consider saving between 10 to 15 percent of your total income every month. Remember to set a savings goal since one of the best ways to save money is by visualizing what you are saving for. If you need motivation, set saving targets along with a timeline to make it easier to save. Now you have a target and know what you will need to save each month to achieve your goal.
- Control your impulses
Credit cards, ATMs and online shopping make it easier than ever to spend money. Especially on things, we want rather than need; the extent to which we succumb to temptation typically boils down to our willpower. Studies have shown that self-control is a bit like a muscle that tires out with use.
If you see something that you want, wait at least a day or even 30 days before you especially if it is a big purchase. You might find the urge passes. This is where a budget comes in as an important tool in the journey to keeping track of your expenses. Do not be tempted into spending money anyhow on things that you do necessarily need.
- Find ways you can cut down on your spending
If your expenses are so high that you cannot save as much as you would like, it might be time to cut back. Identify non-essentials that you can spend less on, such as entertainment and dining out. Look for ways to save on your fixed monthly expenses like television and your cell phone, too.
Saving up in order to achieve your goals requires discipline. Take charge of your finances today and secure your tomorrow. For more information on saving accounts visit: https://familybank.co.ke/account-type/personal-accounts#nav-savings