Everyone wants to make savings and be able to put money aside, but it's not always easy as income may not be that great. But with proper budgeting, developing the right reflexes and using the right tools, it is entirely possible. How to save money fast? How to save money for a small salary?
Motivation for saving and setting realistic goals
Before you start saving money, it's important to determine why you want to do it, especially if your income is low. Your goals may include buying a car, travelling, preparing for retirement or building a financial cushion for emergencies. It's important to find a compelling reason that will motivate you in the long run, as saving money on a low income often requires drastic lifestyle changes. Without a clear goal, it can be difficult to stay disciplined and resist the temptation to spend money on unnecessary purchases.
Set realistic and achievable goals to stay motivated. View saving as an opportunity to spend better and more efficiently rather than as a restriction on spending. For example, if you have an income of €1,200, you should not expect to be able to put away a large amount of money in a short period of time. It is important to estimate how much you can realistically put aside each month and stick to this plan, gradually accumulating funds to achieve your goals.
How to effectively manage your personal finances: A simple strategy
Before embarking on a savings plan, it's important to analyse your finances. Within 30 days, analyse your bank account and all movements of funds to create a budget. Compare your expenses to your monthly income to see how much you can set aside or where overspending occurs. Divide your spending into fixed (rent, bills) and variable (shopping, leisure) to find opportunities to cut costs.
Once you have a clear picture of your finances, prioritise your variable spending. Reduce or eliminate unnecessary spending to increase savings. Set monthly goals and keep track of them. If your savings are insufficient or, conversely, too tight, adjust your budget.
Use modern technology to monitor your finances: mobile apps, alerts, graphs and widgets. Set up notifications on the movement of funds to know exactly when and why transactions were made. This will allow you to quickly manage your expenses, avoid unnecessary spending and keep track of your financial goals.
Effective ways to manage and prioritise your savings
To save effectively, you need to manage your finances properly and choose the right tools. Let's take a look at some basic strategies to help you maximise your savings:
Finding the right savings product: Setting aside money each month is a great start, but it's important to choose the right savings product depending on your goals. For example, Livret A is suitable for short-term savings, while life insurance is suitable for long-term investments;
Categorising your money: For successful savings, it is important to categorise your money into clear categories, which can be done using the envelope method. This allows you to strictly control your spending and keep more money for savings;
Set aside exceptional income: Extraordinary income, such as bonuses or tax refunds, can be used to reach financial goals faster. Separate these funds from your core expenses so they work for your future;
Other examples of ways to save money: Follow proven rules such as the ‘50/30/20’ rule to balance your budget and allocate the right amounts to needs, wants and savings. Also apply the 52 week rule and the 1% rule to make saving money more organised and successful.
Conclusions: Optimise spending to increase savings
Reducing your monthly expenses and bills is one of the most effective ways to save money, even if you have a low income. Take steps to reduce your utility, internet, phone and entertainment costs by taking advantage of available savings opportunities. Review your subscriptions and packages to assess their necessity and benefits, and if necessary, switch providers for better terms.
In addition, banking and financial institutions often offer lucrative commercial offers such as bonuses and cashback on purchases. Taking advantage of these opportunities can help you cut costs and maximise your savings. Don't be afraid to switch banks or take advantage of modern cashback cards so that the savings can go towards your financial goals.
Met Sorrows
Legal expert with 30 years of experience.