Saving is very important to increase our wealth. If we want to retire with a good sum of money, then saving is very important and any financial expert would tell you the importance of saving and guide you towards that. This article in particular is going to talk about saving money despite having all the regular expenses you usually have every month. That can be challenging but if planned well, it is not a big challenge.
When it comes to money management, there are 3 ways in which our money has to be managed. If we channel our monthly income on these 3 channels properly, we can save money without making it a challenge or overhead for us.
Mandatory expenses
Every month we have some sort of expenses that are mandatory to make. For example, Groceries, electricity bills, internet bills, etc. These are some of the expenses that we cannot save. We have to do these expenses at any cost. If we are planning to quit our jobs and retire, we have to make sure at least these expenses are met with the passive income source we are having. That's how we can either plan our retirement or try something new in our life. These mandatory expenses are something that cannot be avoided but there are also rooms available where these expenses can be cut short.
Food expense is also a mandatory expense but sometimes we might buy groceries or vegetables from a nearby shop which can be costly. If we are keen on saving these expenses, we can pick some source that can give these to us cheaply without compromising the quantity. I understand that this hunt may not be an exciting thing for everyone but regularly we can save some money if we plan our mandatory expenses properly.
Luxuries or desires
This is the main area where this article is centered. We have to save the money without sacrificing our desires. This is the ultimate goal. But to do that, we have to define what are our desires. Watching a movie with our family or going to a restaurant with our family can fall under this category. Sometimes a short trip can also be a part of our desire that can consume some fuel. But these desires will also need some checks done. We have to define how many movies we would be watching in a month or how many times we would be visiting a restaurant. Traveling in the car can also be planned well so that we can save some fuel costs.
Creating a budget on our desires and sticking to that budget is the right way to channel the remaining money toward savings and investments. Sometimes we can avoid some of our desires and save a lot of money and use them either for our plan or for a future investment. If we have lots of desires and we would like to spend a lot of money on desires, then it is very important to create multiple streams of income. Having a good cash flow will not let us compromise on our spendings on desires and luxuries and we can spend our money safe.
Savings and investments
Many experts say that this is the place where our money should first go. This is going to be our future and this is what decides when we are suitable to retire. The money we have saved from the other categories also goes into the savings. If we have a secondary source of income or other cash flow, we are safe to do multiple investment. We can easily reduce the number of years it can take for us to reach our financial freedom.
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