Throughout your life, you will have to learn the basics of saving and spending. A lot of decisions are being made about it.
These decisions can range from small purchases like a new smartphone, to large purchases like a car or house, all the way to long-term savings for retirement or some unknown possibility.
While, there are some life things you can plan for, and save for, such as higher education expenses or starting a family.
On the other hand, it is impossible to anticipate a lot of unplanned expenses, so you should always prepare for any kind of expenses by saving a certain amount and putting it aside.
Saving Basics
If you're hesitant to start saving or think it's completely impossible, think of it as a path to a world of wonderful opportunities rather than a burden that gets in the way of your life.
There is no doubt that you will need the money that you have saved for emergencies during your life, whether those circumstances are good or bad. Here are some basic steps to get started.
Set a budget and stick to it. At the time of preparing the monthly budget, the expected expenses are overestimated. In this way, you will most likely have a surplus that you can add directly to your savings.
Pay yourself first. Set an amount of money to spare each month as if you were paying an extra bill. Set aside a portion of each salary you earn - preferably between 10-12% - and notice how your savings gradually increase.
Saving wisely. Choose the right savings methods for your goals, and be sure to research and inquire about the best interest rates.
Be prepared for unforeseen circumstances. An emergency savings fund is set up to cover living expenses for 3-6 months and is used in case you have to pay unexpected costs.
Set your financial goals to stay on track. Set goals to know exactly how much you want to save and for how long. When you set clear goals, it is much easier to track your progress.
Smart tricks for efficient savings
Knowing some saving basics are good motivators. After you've built up an emergency savings fund and saved enough to support your needs for 3-6 months, you can start saving for what you really want.
Think about your short-term goals (this month's or year's purchases) and your long-term goals (life's big projects, big expenses), and use this guideline:
• Specific goals inspire; Setting a clear goal helps you focus on saving for it.Example: Save enough for the summer vacation.
• Measurable savings goals ensure you reach your goals. Using real numbers allows you to accurately measure your progress.
Example: The summer trip costs 500$, and I only have AED 300$.
• Achievable goals. When setting your goal, make sure it is realistic and within reach.
Example: I know I can save enough money each week for that trip.
Meaningful goals make you feel good. Don't set a goal unless you know it will benefit you in the long run.
Example: I am saving to buy a house share because it is cheaper than staying in a hotel.
Time-bound goals have a real deadline for implementation, as setting a time frame for your goal helps you commit to achieving it.
Example: I want to go on vacation next summer.