The following is a guest post via MoneySupermarket
Savings is the catchphrase at the moment for many in these difficult economic times. If we saved more before, we might not have been in the dire straits we are now, either globally or personally.
Can you save more? Can you afford to save more? How much can you afford to save and what would it mean for your future? Consider the options and see this page for the best interest rates currently available on savings accounts. If you do not have a budget, it is time to get one. Do it before the end of the year or make it a New Year’s resolution.
The beauty of a budget is that it trains the mind and disciplines your spending habits – something we can all use in our lives.
Take a sheet of paper and draw a line in the middle. In the first column write everything that you earn and include your full-time income and any other part-time income that you may receive regularly. In the second column write all your fixed monthly expenses. The idea is that there should be more money in the first column than in the second!
If not, you have to seriously reduce the spending in the second column. In the second column you will find expenses that are necessary with items such as a mortgage loan repayment, car repayment, required insurance and utility payments. Insurance payments would include health insurance and any insurance on your car or house. The car and house insurance might be a lender requirement or a sound judgment of your own.
Also necessary, will be amounts spent on items such as groceries. Gas will also be necessary, but how much of it is necessary? Can you perhaps make a plan to reduce your gas bill by taking the train or bus more often to avoid rush hour traffic? Can you team up with a neighbor on your way to work? If you use public transport, will the cost be less than your gas bill? Can you walk to a store nearby instead of using your car, out of habit?
Look at the expenses in the second column and work out what you can stop paying and put it into savings instead. Do you have any store accounts? Will it not be better to pay them off, save that amount and buy with cash in future?
Do you eat out? Do you order in? Can you reduce those amounts? Will it not be better to cook a healthier meal at home and involve your kids in the cooking process? If the kids cannot cook, it will afford them the opportunity to learn an invaluable skill. Also, home cooked meals are healthier than bought ones and by keeping their hands busy they will snack less and they can even lose weight.
Reducing expenses is easier said than done. If you earn just enough to get by, you will never save much. The fact of the matter is that we all need an emergency fund because we don’t know what the future holds.
Add another item to your list of necessary expenses and call it savings. Arrange for a deduction from your bank account so that you cannot renege on your decision. Then forget about it. Your savings can be a saving grace. Make a definite effort to start saving, even if it is the smallest monthly amount that the bank will accept.