There are lots of different ways to save money. The first step to saving money more efficiently is to think differently about it.
- Use a different equation.
Most people tend to think of saving using the following equation
income – expenses = savings
If we really want to save, we should use
income – savings = expenses
Practicing the second equation should make us save money first, and then the rest will be for our expenses. In my case, I have a separate savings account from my payroll account. Every payday, I transfer a portion of my pay into my savings account. I make it a point to only spend the money left in my payroll account, and leave the money in my savings intact. Since I don’t move the money in my savings account as much, this money serves as my emergency fund.
It is important to note that we are saving because we want to fund our dreams and future needs. So why shouldn’t saving be a priority?
- Identify the true opposite of saving money.
People tend to have this false sense of deprivation when saving money. We often think that in order to save, we should deprive ourselves from spending our hard-earned income. Just because savings and expenses appear in opposite sides of the equation does not mean they’re opposites.
Spending is paying money for present needs and wants. Saving is keeping money in the present, so it can fund future needs and wants. In both cases, the money will be used to fund something. It only differs when.
What then is the opposite of saving? Owing. When we owe money, it means we are using money we practically don’t have yet for current needs and wants, to be paid later by our future selves to some entity. Debt always grows until paid in full, so we have to make sure that our income will grow faster than our debt and our future needs.
Do not fall into the debt trap.
- Increase your income.
The seemingly most obvious solution is actually quite unpopular. We tend to associate it with extra effort, sometimes even suffering. Not to worry, there are easy ways to increase our income. Remember: “Chances for everyone, everywhere.”
- Improve the quality of your current income stream.
We’re looking for one word to add to our income: incentives. As tutors, the best way to receive incentives is to maintain good attendance and improve lesson quality. In doing so, we also avoid those dreadful penalties; we hit two birds with one stone.
Learn more about incentives in the Help Desk page in the website by clicking here (after logging in).
2.Add another income stream.
RareJob’s tutor-staff are perfect examples of individuals who have multiple income streams. They earn by being part of the company’s staff, and they earn from their lessons. They do forgo of the work-at-home perk, but the company provides benefits to make the office feel just like home. Besides, if tutors receive incentives for good performance, so do staff. #bonus
Do you live near Quezon City and are looking for a fun, youthful work environment, why not be one of RareJob’s tutor-staff? Check out our career site here.
- Track your cash flow.
The simplest form of tracking our cash flow is to record all expenses made every day, and then grouping them in categories such as food, transportation, etc. Every month, we sum them up to get our total expenses. This way, we will know which categories we might be splurging on.
- Check your progress.
When we can successfully track our cash flow, the next step is to check our monthly saving progress using the equation
income – expenses = savings
Then we add our savings for each month to watch them grow in value.
Remember, we use the above equation for checking our progress, but in practice, we put savings before expenses.
Learning how to save is an essential life skill. Only when one knows how to save for the long-term (at least three years) and have saved enough for an emergency fund, can one level-up for the next skill – investing – which we will have to set aside for another article.
Reference
https://bettermoneyhabits.bankofamerica.com/en/saving-budgeting/ways-to-save-money
Jan Frayre
Jan is a web developer who loves to explore new ideas and places. His hobbies include investing, coding, and playing PC strategy games. He likes to read books and write to exercise his creativity and to simply live life to the fullest.
