7 Simple Ways of Saving Money: Budgeting Rules
In this article, you’ll learn the 7 best money-saving tips.
What are the rules for saving money?
Recently, prices of pretty much all basic costs have gone up. Rent, gas, electricity, groceries… Due to inflation, life, in general, has become a lot more expansive in a short amount of time. For many people, these higher costs make it a lot harder to find ways of saving money. Many households find that at the end of the month, there just isn’t any money left to put aside for saving. Luckily, hope is not lost! There are some simple rules for saving money that can help you save money every month so that you as well can reach your financial goals without becoming an expert investor.
The 7 best ways of saving money
Get ready for the 7 best money-saving tips that will help you to reach your saving goals finally.
1. The 50/30/20 Rule
The 50/30/20 rule is one of the simplest but best ways of saving money. What this money saving tip basically comes down to is that you spend 50% of your monthly income on your basic necessities, such as rent or mortgage, food, water, electricity, insurance, et cetera. Of the remaining half of your income, you spent 30% on wants. These are the things you don’t really need to buy but do make you happy, such as going out to dinner, new shoes, a holiday, or a gift for a friend. The remaining 20% goes to your savings.
2. The Rule of 72
The Rule of 72 claims that if you use it correctly, you can double your money in a relatively short amount of time. Sounds good, right? So, how does it work? You can use the rule of 72 to determine how long it will take for an investment to double due to compound interest. This is how you calculate it: you take 72 and divide it by the rate of return you hope to earn. For example, if your investment provides an interest of 5%, divide 72 by 5. 72/5=14.4. This means that, in this scenario, your investment will be worth double in 14.4 years.
3. 1% Rule for Impulse Buys
Spending money on things you enjoy can give you great pleasure short term. But impulse buying can really sabotage your money-saving plans. The 1% rule can help you reduce some of your impulse purchases. Here’s how it works: every time you want to purchase something worth more than 1% of your annual gross income, you have to wait a day before buying it.
4. Maximize your Retirement Funds with employer
It can be tempting to spend your money on items and services that bring you short-term enjoyment. However, there’s also the future to think about. You don’t want to end up in old age with an empty bank account. That’s why it’s never too early to start saving toward retirement, even if that prospect feels very far off into the future. Talk to your employer about the retirement options they offer. Perhaps your employer offers and employer’s plan that allows you to save more money for retirement.
5. 3X Emergency Fund Rule
The 3x Emergency Fund Rule helps you to set a savings goal to aim towards. How much money should you have in savings, according to this rule? At least three times your current monthly income. According to this money-saving tip, that amount is the bare minimum. So, let’s say you earn €2000 a month, then you should have at least €6000 in savings. This will allow you to be able to afford unforeseen emergencies such as losing your job or appliances breaking down, et cetera. Once you’ve reached that goal, you can take it a step further and save money until you have six times your monthly income. This will provide you with the necessary financial stability you need in life.
6. Item in, Item Out Rule
Are you frustrated because you have a habit of buying too much stuff? Even buying cheap items can, over time, chip away from your savings. Which is such a shame. One money-saving tip you can apply if you recognize this pattern is the ‘item in, item out’ rule. How this works: you make a deal with yourself that every time you buy a new item, you must get rid of another item that you already own. This rule will make you more mindful when you’re about to purchase something. “Is this thing really worth it to get rid of something I already own and love? Do I actually really need it?”
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This blog is for educational purposes only. The information we offer does not constitute investment advice. Please always do your own research before investing. Any views expressed in this blog and by BOTS do not constitute a recommendation that any particular cryptocurrency (or cryptocurrency token/asset/index), portfolio of cryptocurrencies, transaction, or investment strategy is suitable for any specific person.