It only takes five steps to save

Tomorrow is the only time that’s too late to start saving money. As difficult as it might be, it’s imperative to save. Every little bit helps. But how do you get started? We’ve compiled an easy to follow five-step plan to help you put money away.

Step 1 – Know where your money goes

Keep track of everything you spend. Make sure you capture everything, from paying your mortgage to the R5 you give the car guard. Once you have everything recorded, organise them in categories such as home expenses, entertainment or transport, and calculate the total amount you spend in each area. This will give you a clear overview of your financial situation.

Step 2 – Create a budget

This step sounds more complicated than what it actually is. Now that you have a general idea of what you need to pay every month, you can plan ahead and measure your expenses against your income. Also remember to leave room in your budget for expenses that aren’t due monthly, for example replacing your tyres. This will enable you to control and manage your spending habits.

Step 3 – Plan to save

Saving money is difficult as there is always a hole that needs to be filled. The best way to overcome this obstacle is to make room in your budget for your savings and then plan around it. Set up a debit order that transfers money into your savings account when you get paid. Every little rand you save is better than nothing, but try to save 10%-15% of your income.

Step 4 – Set a goal

It might be easier for you to work towards a goal. Decide on something you’d like to accomplish – go overseas, remodel your home, a new car, your kids’ education, anything. Now plan what you need and set a deadline.

Step 5 – Prioritise

Review your finances to see what the important things you spend your money on are and what expenses you should cut. Knowing where you are and where you want to go, mixed with dedication, are the only tools you need to pave the way for achieving your monetary goals.

Don’t waste time; start your journey toward a stable financial future today!

Information source: Bank of America