A new year begins and this is the perfect opportunity to organize your finances. The planning of purposes for 2024 begins, making it the ideal time to save with a clear objective. Various tips to achieve this will be presented below.
What is savings and why is it important?
Saving is the activity that involves setting aside a percentage of income instead of spending it. As a result, it involves giving up immediate consumption to accumulate funds that can be used in the future. On the other hand, saving is important since it allows you to have financial backup in case of emergency. Likewise, it serves to achieve goals: buying a house, or paying for studies. Even having the financial independence that will help you make a purchase, without depending on the application for loans or credits. That will provide peace of mind and reduction of financial stress.
Saving definitely has several benefits, in this blog you will learn several tips to start this habit.
1. Apply the 50/30/20 rule
This rule suggests dividing expenses into 3 parts and implies allocating 50% to basic needs such as: housing, education, basic services, food, clothing. While the 30% will be assigned to desires such as entertainment, a dinner, going to the movies, personal care such as a spa, streaming services, etc. For the remaining 20% it will be considered savings, which will be used to achieve objectives such as going on a trip, purchasing a technological item, or more ambitious goals such as an asset.
Therefore, it is essential to establish a clear objective to define what you want to save on, in the short, medium or long term in a realistic way. It is important to keep in mind that savings will be different for a family that has children because there are a greater amount of expenses. The savings that a single person who already works, but who lives with his parents, can have, so this stage is ideal for saving. On the other hand, this budget must consider expenses that are not monthly, better known as variable expenses: pet grooming, car maintenance, home repairs and others, to assign them a specific value.
During this process, keep in mind the advice of Warren Buffer, a renowned financial guru: prioritize needs over wants, avoid unnecessary debt, and invest in education because it ensures that companies cannot take away what they have learned from people.
2. Record expenses
Each expense must be identified, even the smallest ones like a coffee, because it is common for people not to know what they spend their money on. This is a way to keep purchases under control to avoid spending more than you earn.
3. Create a savings account
You can designate an exclusive savings account, different from the one normally used. Here you can deposit a designated monthly salary for savings. In fact, several banks offer alternatives to this type of savings account, in which they provide interest for accessing them.
4. Cut expenses
If you want to achieve a goal more quickly or increase the amount of savings, it is feasible to reduce expenses. You can consider saving on entertainment: by going to free admission places, reduce the number of times you eat out. Likewise, it is recommended to review the charges for memberships or subscriptions that are no longer used.
5. Compare prices
Currently, technology offers the ease of checking prices on the Internet. If there are products that are purchased frequently and their value is already known, it is easier to compare prices to have savings that can be significant in the long run. For example, if you buy orange juice every month, but in another supermarket it is $ 0.30 cheaper, in 6 months by saving this percentage you will be able to obtain $1.80 that can be used for a drink or to take a taxi. If we take into account that there can be several products and over a longer period of time, the savings can be considerable.
Finally, this is the time to apply these tips that we have given you to save during 2024. You can start with small steps that will later make big differences. We encourage you to take the first step towards financial well-being with BMI Ahorro, learn more about this product here: https://www.bmiahorro.com/
References:
Castillo, GA (2021, October 20). Warren Buffett's best financial advice. Forbes Ecuador. https://www.forbes.com.ec/money/los-mejores-consejos-financieros-warren-buffett-n9108
How to understand the 50-30-20 rule | Financial Goals | Chase.com. (sf). https://www.chase.com/es/personal/financial-goals/articles/50-30-20#:~:text=La%20regla%20sugiere%20designar%20tus,para%20ahorrar%20para%20las%20metas.
Communications. (2023, August 17). What is a budget and how to prepare one based on objectives and goals. BBVA NEWS. https://www.bbva.com/es/salud-financiera/que-es-un-presupuesto-y-como-elaborar-uno-en-base-a-objetivos-y-metas/
Habits, BM (2023, December 8). How to start saving money: 8 tips to save money. Better Financial Habits®. https://bettermoneyhabits.bankofamerica.com/es/saving-budgeting/ways-to-save-money
It's hard for me to save. (sf). MOVI. https://estardondeestes.com/movi/es/articulos/me-cuesta-mucho-ahorrar#:~:text=%C2%BFPor%20qu%C3%A9%20nos%20cuesta%20ahorrar,solucionarse%20con%20una%20buena%20planificaci%C3%B3n.
Navarro, Á. P. (2023, June 27). How the 50/30/20 rule works to save with any salary. The vanguard. https://www.lavanguardia.com/economia/bolsillo/20230626/9062755/ahorrar-sueldo-salario-metodo-como-trucos-consejos-gastos.html
