One of the best things you can do in your adult life is to be able to manage your money well. Regardless of whether your salary is big or small, knowing how to live within your means and pay out everything that needs to be paid in a timely manner each month can reduce a whole lot of stress. But as well as being able to manage from paycheck to paycheck, it’s always worth having some put away for a rainy day too. Here’s how and why you need a financial buffer of savings in the bank.
You Never Know When Financial Hardship Will Hit
It could be an unexpected bill, a natural disaster, a redundancy, even an accident leaving you out of work. Sure, a good personal injury lawyer might be able to win you compensation, but this can often take many months. If you have insurance for things, this can take a while to come through. If the worst were to happen, would you have money to get by in the meantime? None of us want to catastrophize and fear the worst, but planning for ‘just in case’ is never a bad idea. Life has a funny way of catching you by surprise, none of us know what’s around the next turn. Having a financial buffer there can prevent an already stressful situation from becoming an even worse one.
Create a Savings Account
One of the best ways to save a substantial amount of money is to open a separate savings account, that’s not touched unless it’s an emergency. If you save in your normal bank account it’s easy to dip into, so open an entirely different account. Each month after you’ve paid your bills and essential outgoings, transfer as much as you can into this account. Even if some months it’s only a few dollars, it will all add up eventually. You could also start a change jar too, get everyone in the family to throw in any loose change and once the jar is full take it to the bank. Transfer what you have saved into the savings account. This is an easy way to boost your savings as no one will really notice the coppers and silvers they’re throwing into the jar.
Sell Things You No Longer Need
Another way you can boost your savings is to get rid of things around the home that you no longer need. Rather than sitting in cupboards collecting dust, these items could bump up your savings, so it’s worth doing. Jewellery, games consoles, discs, clothes, electronics- you name it if you have it someone out there will want to buy it. Use sites like eBay, Craigslist or Facebook groups. Apps like Depop are useful for selling clothes, and there are plenty of specialist websites for gold, mobile phones or anything else you might have. You could even set up a yard sale or go to a car boot fair and sell smaller, lower value items like kids toys and bric a brac. It’s the perfect opportunity to declutter, and you could make a wedge of cash in the process.
Get Your Budget In Order
Unless your money is under control, you will never be able to save properly. When you’re constantly overspending or missing bills, you will be forever catching up and freeing up no money to save. One of the best things you can do when it comes to saving and money in general is to create a budget and stick with it. Write a list of everything you have coming in and all expenses you have going out. Ideally set all direct debits to come out at the same time each month, so you always know when they’re due. Work out where you can make cutbacks in areas where you’re spending too much. For example, instead of driving or catching the bus to work or school could you walk or ride your bike? Instead of your weekly takeout meal, could you perfect your cooking skills and whip something special yourself up instead? When you go grocery shopping, even switching some of your products from big brands to own brands can save thousands over the course of the year. This is money you could save, and put into your savings account to be used on something more important later down the line.
Pay Debts With Savings
One of the mistakes people can make when it comes to finances is saving up money while they’re in debt. This doesn’t make sense since each month you are paying interest which is costing you money. Your best bet would be to pay off debt, things like loans, credit cards and store cards first. Once they’re paid (and the accounts have been closed) then you can start saving. Do it the other way round, and it will take you far longer since money you could have been saving will be spent on interest. If your debts are out of control and you’re struggling, talk to a debt management company about your options.
Stockpile Essential Items
As well as saving money, another way you can prepare for leaner times is to stockpile useful items. In the kitchen, this could be things like dried pasta, rice, couscous and other grains, sauces, tins, jars, and herbs. Make sure things are carefully sealed in plastic or glass containers, that way no pests or mold can creep in and everything will stay good for many years. If you have a big chest freezer in your garage, fill this up with things like meat or batch cooked meals. In the bathroom, it could be toiletries- shampoo, shower gel, toothpaste. Then you could stock up on cleaning products and other essentials. You don’t have to get this at one time, wait until you have coupons or see things on offer. Keep squirreling away until you have a good stash. That way if you do go through a harder time financially, you don’t have to dip right into your savings. You already have some essential products on hand to use and get you through until money is better again. Start spending on groceries right away and it could cost hundreds over a few months. If you get things gradually and build it up, you won’t even notice the difference with money, and you protect your savings later down the line.