Saving money every month comes down to spending less than you earn and putting the difference somewhere you won’t touch it. That’s what it is all about. There’s no secret formula, no need for a six-figure salary. The secret is a combination of awareness (knowing where your money is going), structure (a budget you can really stick to), and a little automation (don’t depend on your willpower on each and every day). Little, consistent habits prevail over big, dramatic changes, nearly every time!
Where Does Your Money Actually Go?
The answer to this question is not something most people can give a correct answer for: Once you ask someone about their food delivery spending during the past month, you will likely hear a guess that is way off.
Get two to three months worth of bank statements. Don’t judge yourself until you look. Divide the spending into general categories: groceries, transportation, bills, eating out, miscellaneous online shopping. You will likely see one category will be larger than you thought.
There are some ways to continue doing this in the future:
- Utilize an application to track budgeting that syncs transactions automatically
- Maintain a basic spreadsheet updated on weekly basis
- Or, simply look in your bank app every couple of days.
These don’t have to be elaborate. The idea is to make it visible, not perfect.
A Budget That Actually Survives Real Life
Most budgets aren’t the problem, it’s the math. It’s because they’re designed for the best version of you. You’ve never been as tempted, never had a bad week, never wanted a treat. That version doesn’t exist, so in three weeks the budget comes crashing down.
The 50/30/20 distribution is a good first guideline:
- 50% for wants — entertainment, vacations, shopping, eating out, etc.
- 20% for needs — food and fuel, clothing, utilities, health, and education.20% for needs — food and fuel, clothing, utilities, health education.
- Save 20% or pay off debt
Use this as a guideline however, do not consider this a rulebook. So if 60% of your income is going towards rent, that’s just a fact of life right now, and the plan needs to accommodate it rather than ignore it. Review the numbers on a monthly basis. As your income goes up and down, so should your expenses and, consequently, your budget.
Make Saving Automatic (Because Willpower Runs Out)
People don’t fall short at saving due to lack of discipline. They fail because they are depending on discipline to begin with, and discipline is tiring and has to be maintained every day.
The solution is simple and effective: automatically transfer money from your paycheck to a separate savings account immediately after you get paid. A few thousand taka here, a few thousand taka there, and before you realize it, it’s gone.
Why is this better than simply “remembering to save”? It occurs before you can use the funds! You are not saving to your own choice. You did, naturally, and now you’re just getting used to what remains.
Another suggestion: choose a savings account that is just a little bit difficult to access. It is not put in a vault and left there, but it is inconvenient enough that you won’t just grab some money and put it back in because you need it for some impulse purchase.
The Subscriptions You Forgot You’re Paying For
This is virtually always worth reading for 15 minutes. When charges come back periodically, they appear to be a no-brainer, and that’s where the problem lies. You’ve registered, and then the fee just keeps on coming, whether you use it or not, month after month.
Review your statements and make a list of all your recurring and subscription fees. If you can answer this question honestly, make sure you would join this one now if it was new to you.
If it is not “no”, cancel it. If in doubt, take a break for a month. A lot of times, you will have no idea you missed it.
Cutting Costs Without Feeling Like You’re Missing Out
No one maintains a savings program that they find to be a burden. Often, the changes that really stick are those that are extreme, but change incrementally over time.
Some that seem to work are:
- Increase home cooking, and make takeout an occasional treat.
- Do some comparison shopping before making larger purchases.
- Wait 24 hours before making non-essential online purchases
- Consider taking public transport or car pooling a couple days each week instead of every day.
There is no need to change your entire lifestyle in order to achieve any of this. It’s more about becoming aware where on autopilot you’re spending.It’s about adding a little pause before those moments, noticing where you’re spending on autopilot more.
Give Your Savings a Purpose
Saving money just because it becomes very mundane and mundane goals are the first ones to drop. A goal with a shape – meaning a number, a date, a why – is so much easier to keep.
Rather than the abstract “save more,” offer a goal that is more specific: Save 100,000 taka in 8 months for an emergency fund or Save enough to cover 3 months of rent by next spring. Progress is measurable with specific numbers and measurable progress is rewarding, far more rewarding than vague progress.
Slice up the large amount of money into smaller, month-by-month amounts. It takes a daunting objective, and makes it attainable. Remember, if your income goal or priorities change, you can change the target. The objective should be for your benefit, not for anyone else’s.
Final Thought
There is no need to make an overhaul of your finances for any of this. It’s often the simple, boring, predictable things that we do that are the same thing over and over again, and it is those habits that save money every month: Where money goes, how much we spend, where money is going on our budget, and what costs we’re reducing that we don’t notice.
Choose one of these items and begin at that one. When it feels normal, put another in. You should allow six months, and you’ll be amazed at what these little changes combine to make.
