Managing your money is arguably one of the hardest things to get right in life. Unfortunately, if you don’t pay much attention to your money situation then you’ll find it extremely hard to save for large future expenses. This could be a deposit for a home, saving for medical expenses or even a car loan.
But what exactly does it take to save wisely and quickly for large future expenses? Here is some advice to help you get started.
1. Start budgeting
The first thing to think about is how saving money can help you build a larger pool of savings for big expenses. The first step towards that goal involves making and sticking to a budget. You can do this by recording your incoming and outgoing money. This will give you a slightly better understanding of how much money you can save each month, but you need to be as truthful as possible when it comes to keeping track of your expenses.
2. Be wise about spending your money
In addition, you need to start being wiser about your expenses if you want to save money for a large purchase in the future. There are many ways to be smart about your money spending but it all starts with proper budgeting. Then you should start looking at ways to cut down on things that you don’t need to buy or could avoid having. Some common culprits include eating out versus cooking at home, or buying a lot of coffee and other snacks throughout the day.
3. Plan ahead for your future expenses
Make sure you know what you’re saving for. For instance, if you’re planning on starting a family soon then you’re probably saving for a home deposit or renovation costs to make more space for your future child. Similarly, you may want to speak with funeral directors to get a better understanding of how much a funeral would cost, or get a life insurance quote to ensure your family don't face financial difficulties if you were to unexpectedly pass away. Once you’ve got that number in mind, you can start planning ahead with your finances to ensure that you’re able to pay it.
4. Live within your means
Being able to live within your means can save you a lot of money. It’s all about cutting out unnecessary expenses and being humble about your financial situation. For example, if you’re constantly buying new fancy clothes to maintain a particular kind of appearance, then it’s a good idea to take a closer look at how much you’re spending. Buying things that you can’t really afford is living outside of your means and that can be extremely dangerous for your financial situation.
5. Have a purpose for saving
Lastly, make sure you give purpose to your savings. It's always good to keep some of your money away in savings for a rainy day; however if you have a specific reason for saving money (buy a new house or car or for your child's college fees), you’ll be far more motivated.