Hello and welcome to another video
Saving money is big problem for most people, simply because we love spending every penny
we earn. let take a look today at 5 tips that will allow you to save tons of money every
month. So lets jump in.
Let me introduce to you three my friends, Bill, john, and Brandon
Bill is 25 and loves spending money. He is like most of us, he doesn’t saves money
because he has a stable job with 36K dollars after taxes that covers all of this expenses,
mortgage, car and the new iPhone he recently bought. As time goes by, Bill gets married
and he becomes a father. Now instead of covering only his expenses, he has to cover his child
and probably wife’s expenses as well, but his salary only has increase by 15 percent
in the last 5 years. Now he has to cut down his spendings to be able to pay all the necessarily
things. As life moves on, his salary keeps increasing but not as much as his expenses.
so After many years, bill decides to retire but he finds that he hasn't saved any money
so he is left with no other choice but to keep working.
On the other side, john doesn’t want to find himself in the position of bill when
he reaches his 60s, so he decides to save 10% of his income, hoping that by the time
he is 65, he can stop working and enjoy his life. After 40 years, assuming that his income
increases by an average of 3 percent a year, he manages to save 264, 385 dollars. Obviously
thats not enough money to travel the world and cover your expenses for the next 20 years
or so, but at least its much better than bill.
Now, our third friend, Brandon who is also 25 and makes relatively similar income, realises
that saving 10% of his income is not going to make him financially free any time soon
and if he wants to see any significant difference, he would have to wait until he is 65. so He
decides to take a different approach. Instead of saving 10% of his income he decides to
save 25%, and instead of simply saving it, he invests it into an investment fund.
Like his other 2 friends, his income increases by an average 3 percent. Assuming that he
keeps only investing 9K out of his salary although that his income is increasing ever
year. In just under 10 years, his savings grows up to more than 150K ($151,093.20).
He can withdraw that money and start his own business and maybe retire earlier or he simply
can keep it in an investment fund and without saving a single penny for the rest of his
life, that initial savings of 150K will grow up to 4.2 Million by the time he retires ($4,246,087.11).
So compare to Bill and john. Brandon will have either retire earlier or have an amazing
retirement.
whats sets brandon aside from the other 2, is that he knew if he would sacrifice 10 years
of his life now, he will be able to live the rest of his life as wants!
1. So the first idea is that, you should know exactly why you want to save in the first
place.
A lot of people give up and stop saving because they don’t see exactly why they are saving.
your goal shouldn’t be to save for a great wedding or a brand new car because once you
get that car, you will go back to your previews position and still face those financial challenges,
so the ultimate goal should be to achieve the financial freedom.
2. Tip number 2 is, pay yourself first!
before even spending a single penny out of your income, put aside a percentage of it
into your saving account (if you don't have one, then make one). You are not allowed to
spend this money under any circumstances, no matter what you are going through this
money cannot be spent anywhere, but only can be invested. Consider is to be as part of
your taxes, something that have to pay whether you like that or not.
3. Know your expenses
if you are not a consistent saver, then it might really be difficult to start, especially
in the first couple of month, when you realise that your savings aren’t growing as fast
as you would want them to. So, instead know your expenses first. Spend the next 30 days
writing down every transaction you make, so that By the end of the month, you have will
a detail understanding of how exactly you spend your money and you can deduct your expanse
in those areas that don’t have a big effect on your life.
For instance, instead of buying a coffee every morning, you can make that yourself and save
somewhere around 50 to 70 bucks a month. instead of driving, use public transport to
get to your job if its more affordable and you might save another 50 or 60 bucks there.
And you might save couple of hundred dollars like that.
4. Procrastinate
Procrastination is bad but in this case. Usually we get excited when we want to buy
something new right away even if its something we don’t really need, but overtime that
excitement goes away. Its like when you buy that new new phone, if the first couple of
days, you might still be excited about it but then, you know what happens, it just becomes
normal. So why not get in the habit of waiting to buy things, especially expensive ones?
You’ll still end up buying all the important things you need, but there will be plenty
of times when you change your mind and hold onto your cash.
5. Use cash always Whenever you buy something, try to always
use cash instead of a debit card, whether you are ordering food in the restaurant or
getting something from groceries. Handing over a 20 dollar bill is a lot harder than
just swiping your credit card, simply because when you swipe your card, it feels like you
are spending a lot less. Over time, you will become a more conscious spender and you'll
buy more of what you need and less of what you want.
So these are 5 tips that will help you to start saving money, i hope you have enjoyed
the video and learnt something helpful. If you accidentally bumped into this video, then
subscribe for more similar videos and as always give this video a thumbs up and I will see
you in the next one.