Making savings is not at all a common activity in our “modern” times …
On the contrary, most people are only interested in buying the things they want as quickly as possible, and for this purpose they often resort to credits. They thus end up paying much higher amounts for objects whose value decreases continuously from the first day and which they will soon want to replace with new ones.
This way of thinking is very wrong.
On the other hand, putting some money aside, making some savings, and ONLY THEN buying those things is a more responsible and effective way to act. Plus, having some savings available – as they say, those “white money for black days” – is a very useful thing in this times of uncertainty that we are crossing. Because those who make savings on a regular basis will be less concerned about any unforeseen events and will be able to cope more easily with such negative circumstances.
The problem, however, is that even if they want to make savings, many people would not be able to do so in an efficient way, because the vast majority of them apply a wrong method: they want to save what is left after they have finished spending on a month. This is a mistake, because there is usually nothing left to save, as spending is at least as high as income.
So what do you have to do?
Here’s the best way to make savings in 6 easy steps:
Well-known investor Warren Buffett, one of the richest people in the world, strongly believes in the habit of saving, although he has a fortune of several tens of billions of dollars. He says, “Do not save what is left after spending, but spend what’s left after you’ve saved.”
And Robert Kiyosaki, a successful investor, author and speaker, who became famous thanks to the bestseller “Rich dad, Poor dad”, advises us in his direct way: “First Pay Yourself!”
So the best way to make savings can be implemented as follows:
1. Know yourself.
First of all, write down your earnings and spending in recent months carefully and analyze them to really understand what your money is doing.
2. Make a plan.
Set realistically a certain amount you want to save each month. Many specialists generally recommend 10% of revenue, but may be more or less depending on your personal situation.
Even if you save only 2% or 3% of your income, you will see that in the long run you are MORE gained than not doing anything.
3. Savings FIRST.
The first thing after you earn the monthly income, put those savings into a separate account that you do not touch. Now there are banks that can automatically do this for you, with the amount you set.
Try to “forget” this savings account, in order to avoid the possible temptations that may arise …
4. Make the spendings only AFTER the savings
Carefully plan the costs you have to do to fit the amount you have left. Try to get used to the idea that these are the only money you can spend.
5. Be consistent.
Follow your plan every month. In this way, your savings account will grow and you will be more motivated to continue.
Making savings is extremely useful. But if you want to become truly prosperous and, in the long run, even financially independent, then this is not enough.
You have to find more profitable ways than bank deposits to place your savings. That means you have to invest.
So, first informe yourself about your risk profile, because there are plenty of opportunities to get better returns than bank deposits. For example bonds, properties renting, peer-to-peer lending. Not to mention investment in capital markets.
The most important thing is to make it a habit to constantly look for serious and profitable investment options, because in the long run, only they will help you build a more prosperous future.