How to start saving money? Action plan

Has it ever happened to you that a random situation (furnace failure, illness, cullet, etc.) forced you to spend a large amount of money at once, which simply wasn’t on your account? Have you ever found out at the end of the month that you had less money than you thought? Or maybe you are unsuccessfully trying to save some of the money you earn so that you can finally buy your dream product? If the answer to at least one of these questions is “yes”, then you are in the right place. In this short guide, we’ll show you how process of starting saving your money.

Managing your money can be a tricky task. It is essential to make sure that you are able to maintain financial stability and even boost your savings. To do this, it is important to have an action plan in place. This involves setting goals for yourself and working towards them, such as creating a budget and sticking to it, researching better investment options, setting aside money for emergencies, or even automating certain payments like your rent or bills. Additionally, it helps to track your spending so you can identify any areas where you could potentially save more money. With some time and effort, managing your money can become much simpler and help you in the long run.

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Save money

Action plan

If you also don’t know where to beging process of saving your money, here is a short action plan. Follow all the steps diligently and your account  with savings will start to look great after just a few months.

1. Set goals

Where to begin saving your money? Preferably from setting goals. Changing old habits to new ones is not easy, so you need clearly defined goals that you intend to pursue. This principle applies to many areas of life – including personal finances. Remember that specific goals should arouse strong motivation in you to act. It’s a good idea to break them down into several categories, such as family (keep your kids safe), hobbies (buy new fishing gear) and future (retirement savings account). Write down all your goals, preferably manually, and check them regularly. Especially when you plan to spend a larger amount of money.

2. Prepare a household budget plan

The home budget is a kind of command center for home finances. Write down all your private expenses and household expenses in one place. Put your income on the other side. Even if you do it at a high level of generality, you will quickly see where your budget is leaking. This is a good starting point for effective money saving. You can manage your home budget in several ways. If you are a traditionalist, a sheet of paper or a notebook will suffice. You can also use a spreadsheet. If, on the other hand, you want to have everything at hand, you can choose one of the many applications for managing your household budget.

3. Plot your expenses

It’s time to carefully analyze the previously prepared budget. Start with expenses, because you can probably reduce them in many areas. There are hundreds of ways to spend less. Here are some suggestions:

  • Spend less on groceries (e.g. by shopping less frequently).
  • Spend less on eating out.
  • Buy less new, expensive, fashionable clothes (e.g. and if you do sell old ones).
  • Unsubscribe from unused subscriptions.
  • Spend less on entertainment.
  • Spend less on transport (e.g. start using public transport or cycling).

This stage is quite unpleasant, but you must act ruthlessly if you are interested in starting saving your money. If your financial situation is not the best, then unfortunately you will have to sacrifice pleasure-related expenses.

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Ways to save money

4. Additional source of income

Just reducing expenses will significantly affect the condition of the household budget. However, if you have time (and willingness), it is worth considering finding an additional source of income. It is enough that it will generate a few hundred zlotys a month. Having your own business, it is worth thinking about gaining new customers, and while working full-time, you should fight for a raise.

There are many ways to earn extra money. Paradoxically, the coronavirus pandemic helped a lot, which meant that more and more companies operate remotely, thanks to which you do not waste time commuting to a second job. In addition, the Internet opens access to a huge market and many potential customers.

5. Get out of debt

Repaid credit or arrears on a debit card is not only an unnecessary expense, but also a heavy mental burden. Getting rid of debts is also the best way to release income, so invest the first financial surpluses in repayment of liabilities. This will make it easier for you to actually begin saving your money. The only exception here is the mortgage, which can stay because it has a very favorable interest rate.

6. Automation

Finance automation is a great tool that will allow you to limit the influence of willpower on the process of saving money. So, set up automatic transfers in your banking system, by means of which funds will be sent to pay off debts, to a savings account and to an investment account.

In addition, set reminders in the calendar that will inform you that you need to look at the household budget. It only takes a few minutes once a week to check that everything is going in the right direction.

7. Invest

Once you have built a financial cushion and paid off your debts, it’s time to start thinking about multiplying your savings. Of course, you can keep the accumulated funds in a savings deposit, but their interest rates are currently at such a low level that minimal profits are eaten up by inflation.