If you want to build true wealth, saving absolutely must be part of your financial game plan. However, unfortunately for many people, saving money is easier said than done but trust me when you find effective ways to save money, stacking up your bank becomes a breeze. Here are 7 ways to save that worked for me and can work for you too!
Number 1: Stop paying interest
One of the worst feelings in the world is receiving your bi-weekly paycheck and knowing that a big chunk of it will be handed over to creditors to cover your monthly interest charges. While this situation is less than ideal, many people are in this situation due to having a mortgage, student loans and even the worst of them all, credit card balances.
Luckily, there are a few ways to mitigate the ill-effects of interest which I will get into now. The first and most effective way to stop paying interest is to not get into debt in the first place. By avoiding debt you can avoid interest payments however in exchange you must be willing to put in the work to save up for all the purchases you make.
Another way to stop paying interest is to leverage forbearance. In financial terms, forbearance is when a creditor you owe money to allows you to pay back your loans and interest in smaller amounts or allows you to put a pause on these payments all together. While this is a temporary fix, it can often be exactly what you need to get your finances in order and be able to get back on a proper footing.
Number 2: Create a budget
The importance of a budget cannot be over-emphasized. Some people use a spreadsheet to carefully execute how money enters and exits their hands while others take a more old school approach and use pen and paper. In reality, the method doesn’t matter; only execution and adherence to the budget does. Now, given that many people don’t have a budget or lack a robust budget, I will briefly go over the components of creating an effective budget right now.
The first element in your budget is your monthly after-tax income amount. This can be income from your job, side hustles, passive income streams etc. This is what you will use as the figure that your expenses absolutely cannot extend beyond. Then, list out…