Do you want to learn how to save money effectively? I share simple methods, which you can put into practice and from today start accumulating your savings.

Saving money is not a one-time activity, but a process. In the long term the habit of saving can change your life, and I trust that these 4 simple ways will drive you to take the first step, and then enjoy the fruits of your savings.

Saving can be compared to making a diet. At the beginning you have to control yourself, but after some time it becomes normal, and the effects are visible all the time.

What is the secret to saving? The secret is to start saving. Do not think of saving as a sacrifice, because by spending wisely you will have more money for what is really important to you.

Take small steps

All this is not about accumulating immediately large sums of money. If you have never had the habit of saving money, then you should start doing it gradually.

There are many ways to save, but no one learns how to use all banking and investment products in a single day. Therefore, where do you start?

Start saving your money in a piggy bank. This is probably the oldest method of saving, but it is still effective. Of course, the money collected in the piggy bank is not giving you interest, but it is the first step to get into the habit.

If you have never saved, the most important thing is to develop the habit. This means saving often, even a small amount of money.

One way to do this is to put the rest of the money that you have left after making the purchases in the piggy banks. You go to the store, you pay for purchases and once in the house you put all the coins in the piggy bank (assuming you pay for your purchases in cash).

When you already accumulate a little money, it’s time to move your savings to a savings account. It is where money is easily available and where interest grows little by little.

You can see this simple diagram:

Piggy Bank -> Savings Account -> Bank Deposit

Once you have a larger amount of money, it’s time to look for the best deals to effectively multiply your savings. Although, the savings account, bank deposit or investment fund, are not the means to become rich, it is a good and simple way to generate some extra money.

Determine the goal of saving

In one of the articles I mentioned the importance of having financial goals . This is also dedicated to identifying your saving goal.

Your goal may be a trip around the world, or the renovation of your home. Let’s say you’re thinking about buying new furniture for $ 2,400 and you think, “Alright, I need $ 2,400 and I’d like to buy it in a year, which means I have to save $ 200 per month.” .

But why is it so important to know our goal in this situation? If you know what you want, it will be easier to do it, because you will be able to deny yourself the pleasure of a moment – “These new shoes cost $ 100, but maybe I do not really need them, and this month I will save $ 100 more to buy the furniture “-

To fulfill your goal, you have to give up other things, and it’s easier to do when you know your goal.

Pay yourself first

Although it is well known and very simple, few of us make use of this principle.

When you get the money, for example, as a monthly work payment, you immediately transfer part of this money to your savings account .

Then with the remaining money, you pay all your monthly expenses.

Let’s be honest – we fail, if we try to save money from what we have left at the end of the month. It’s true, because at the end of the month we have nothing left. Therefore, we must do it at the beginning of each month, and deposit a percentage of our salary to another bank account.

I’m sure you know the basic principle of personal finance, which says:

Income – Expenses = savings

According to this principle, it seems that it does not matter if you save at the beginning or at the end of the month. However, let’s modify it a bit to see the difference:

Income – Savings = expenses

What has changed? When you first save part of your earnings, you have “less” money to cover your expenses. Less money means better use of it .

Imagine that you have a cold and you have a box of tissues. Then imagine another situation where you only have a handkerchief. When we start to miss something, be it a handkerchief or something else, we begin to use it more efficiently. With money it is exactly the same.

There is still the question of how much money should I save? 10 dollars, 50 dollars … How much is enough?

Each of us wins differently, so it is better to assume that this will be a percentage of the profits. The ideal would be a saving of 10% to 15%.

If at this moment this percentage seems impossible, then start with 5% of what you earn. You can transfer this money to a bank account, and it is best to do it on the day of payment. So, for example, if you earn $ 1000, determine an amount of $ 50 to $ 100 that you want to save.

Test and choose what is best for you

One of the most important saving principles says: use the savings methods that work for you. This principle is not only applied to save money, but also to all the principles of personal finance. I assure you that I will repeat it in this blog so you do not forget it🙂

You can find a lot of information on how to save money online and in books. However, sooner or later you will realize that being efficient is not about using all the methods of the world, just because they are working for other people.

You need to experiment, try different options and see what works for you. In this blog I also share different savings methods, but I do not want to say that by using them you will get exactly the same results as me.