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This article was co-written by Ara Oghoorian, CPA. Ara Oghoorian is a financial accountant (CFA), financial planner (CFP), certified public accountant (CPA) and founder of ACap Advisors & Accountants, an accounting and wealth management firm. Packages in Los Angeles, California. With over 26 years of experience in the financial industry, Ara founded ACap Asset Management in 2009. He previously worked for the Federal Reserve Bank of San Francisco, the US Department of Treasury and the US Department of Finance and Economics. Republic of Armenia. Ara holds a bachelor of science degree in accounting and finance from San Francisco State University, is a banking ombudsman working through the Federal Reserve Board of Governors, holds a specialist degree in financial analysis (CFA) , a financial planner (CFP), holds a certified public accountant (CPA) degree and holds a Series 65 license.
There are 13 references cited in this article that you can view at the bottom of the page.
This article has been viewed 15,644 times.
Saving money is much easier said than done; Everyone understands that saving money is a wise choice, but it is difficult to implement. Saving money is not simply spending less, but it can also be seen as a challenge. Smart savers need to consider how they spend their money as well as maximize their income. Please read the article below for more details.
Steps
Save Money Responsible
- To set up automatic deposit, you can talk to your pay staff at work (if you are a contract worker, work with a payroll intermediary). If you can provide your savings account information separately from your regular salary account, you should be able to create an automatic deposit program without any problems.
- If for some reason you can’t set up an automatic deposit for every paycheck (whether freelance or cash-in), decide for yourself how much to deposit each month and always accomplish the goal .
- If debt cannot be avoided, try to pay as much in advance as possible. The larger the upfront payment, the faster the installment process and the smaller the amount of interest.
- Although everyone’s financial situation is different, banks recommend paying off debt equal to 10% of total income before tax, or keeping it below 20% is best. The 36% level is the “upper limit” of the debt. [1] X Research Source
- Big goals like a pension take a long time to complete. During the necessary period, financial markets will be subject to many fluctuations. You can spend time researching future financial market predictions before setting goals. For example, if you have a good income this time around, according to financial commentators, you need to save at least 60-85% of your annual income to maintain your current life in retirement. [2] X Research Source
- So in our example, if the house costs 600 million VND then you need to pay at least 600,000,000 x 20% = 120 million VND. Depending on your income level to consider this price is feasible or not.
- Setting a timetable is extremely important for short-term goals. For example, if you want to change your car but don’t have enough money, you need to save up for a car change as soon as possible to make sure you have a vehicle to go to work. An ambitious but reasonable timetable can help you achieve your goals.
- For example, your income is 8 million VND per month, you can make a spending table as follows:
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- Housing/utilities: 3 million VND
- Student loan: 500 thousand VND
- Food: 1 million VND
- Internet: 300 thousand VND
- Gas: 200 thousand dong
- Savings: 1 million 500 thousand VND
- Error: 500 thousand VND
- Shopping: 1 million VND
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- You can take notes in a notebook. Make it a habit to record each expense and keep receipts (especially large ones). If possible, copy it into a large notebook or import the data into a spreadsheet program for long-term storage.
- You can now download many apps to your phone to track your spending (some of which are completely free).
- If the spending problem becomes serious, don’t hesitate to keep the entire bill. At the end of the month, you divide bills into categories and then summarize. You may be stunned by the amount of money you spend on shopping that exceeds your need.
- Let’s say you go out for drinks with friends and one of them orders a strawberry smoothie for the group, but then you shouldn’t be paying for the group. With the thought that one day you pay the next day someone else pays equally, but that will create a financial hole for you, a huge hole.
- Don’t share payments just for the sake of convenience. If your meal costs 1/3 of the group meal, you shouldn’t pay half the bill.
- Consider getting a phone app that helps you calculate the exact amount of the tip.
- For example, when you are 20 years old, you work at a low-income job, you save 10 million dong and deposit it in a high-interest savings account, 4%/year. After 5 years, the profit is about 2 million VND. However, if you deposit this amount 1 year earlier, the interest will increase by VND 500,000.
- If you haven’t already, talk to your employer about whether you can open a 401k savings account. This retirement account will automatically deduct a portion of your paycheck, making saving easy. What’s more, the money saved in a 401k account is not taxed on income like your paycheck. Many employers offer a variety of 401k service-compatible plans, which will match a certain percentage of each paycheck.
- In 2014, the maximum amount allowed to deposit into 401k account per year is 350 million VND. [4] X Research Sources
- To refer to smart stock investment information, you can see more articles online.
- If you are discouraged about your financial situation, talk to a financial counseling service. These agencies often give free advice or charge a very cheap fee, they will save you money to achieve your goal. The National Foundation for Credit Counseling (NFCC) is a nonprofit organization, a good place to start. [6] X Research Sources
Spending cuts
- Unsubscribe from TV options and internet plans.
- Switch to a savings plan for your phone.
- Swap an expensive car for a fuel-efficient car at a cheaper price.
- Sell unused electrical equipment.
- Buy clothes and home furnishings at thrift stores.
- If you’re renting, you can negotiate with your landlord to lower your rent. Landlords often avoid finding new tenants, so you can discuss this with them. If necessary, you can work to deduct the rent (like gardening).
- If you’re paying off a mortgage, talk to your lender about refinancing. You can negotiate to get a better deal. When re-administering, try to pay in the shortest amount of time possible.
- You can move on to the cheaper housing market. According to recent research, the cheapest housing market in the US is in Detroit, Michigan; Lake County, Michigan; Cleveland, Ohio; Palm Bay, Florida; and Tpedo, Ohio. [7] X Research Sources
- Choose cheap, nutritious food. Instead of buying processed foods, buy fresh foods at the grocery store. You will be surprised at how cheap healthy food is! For example, brown rice is a nutritious but cheap food.
- Take advantage of promotions and discounts. Many grocery stores (especially large chain stores) offer coupons and discounts at the checkout. Don’t waste them!
- If you often eat out, stop now! Cooking at home is much cheaper than eating out. Cooking regularly by yourself also trains many skills to use when entertaining friends, family, or dating a lover.
- Don’t be afraid to take advantage of the free food supply at the store if the situation is urgent. Food banks, charity kitchens, shelters can provide free food if needed. If you need help, contact the Department of Social Services for more information.
- Turn off the lights when we do not use. There’s no reason to leave the lights on if you’re not in the room (or in the house), so turn them off when you’re out. Post a reminder by the door if you forget.
- Avoid using heaters and air conditioners when not needed. To reduce the temperature, open a window or use a fan. If you want to stay warm, dress in layers, cover yourself with blankets, or use a heater in your room.
- Invest in good insulation. If you can afford to pay for a home upgrade, replacing old and leaky insulation with a new, more efficient model will save you money in the long run by preventing heat from escaping.
- Invest in solar panels if possible. This is a serious investment for your future (and the planet’s), solar panels are a wise choice. Despite the high cost, solar technology will save you significant costs.
- Consider public transit close to home. Depending on where you live, you can choose from a variety of cheaper public transport options. Large cities often have subways, bullet trains, and trams that move in and out of the city, while small towns have buses and trains.
- Consider walking or cycling to work. If you live not too far from the office, these two ways are not bad choices to both exercise and breathe fresh air.
- If you must have a car, try carpooling. That way you can split fuel and maintenance costs with carpoolers. Moreover, there are people to talk to.
- Catch up on community events. Today, cities and towns all post online calendars of upcoming local events. Events organized by local authorities or community organizations will be cheap, or even free. In a small town, for example, you might be able to visit a free exhibition, watch a movie at a local park, or attend sponsored events.
- Read. Compared to movies, video games, and other forms of entertainment, books are the cheapest (especially second-hand books). A good book will appeal to you, help you experience life through the eyes of interesting characters or learn new things that you may never encounter.
- Enjoy cheap activity with friends. You can do a lot of things with your friends for little money, or even for free. For example, climbing a mountain, playing a game, watching an old movie, exploring the city, or playing a sport.
- No smoking. Everyone knows the harmful effects of smoking. Lung cancer, heart disease, stroke, and many other dangerous diseases are all caused by smoking. [8] X Trusted Source Centers for Disease Contrp and Prevention Go to the source Furthermore, cigarettes are also expensive, and prices vary from place to place. [9] X Research Source
- Don’t drink a lot of alcohol. Drinking 1 to 2 drinks with friends isn’t harmful, but regularly drinking hard alcohol can cause serious problems in the long run, such as liver disease, impaired nerve function, weight gain, delirium, and even delirium. even death. [10] X Research Sources Furthermore, alcoholism is a financial burden.
- Not addicted to drugs. Drugs of all kinds such as heroin, cocaine and methamphetamine are addictive and seriously damaging to health. Their prices are much higher than cigarettes and alcohol. For example, country musician Waylon Jennings spends $1,500 a day buying cocaine. [11] X Research Source
- If you need help overcoming your addiction, don’t hesitate to contact the hotline. Some related lines: here.
Spend Money Wisely
- However, just because things like food, water, and shelter are important, doesn’t mean you’re squandering it. For example, cutting the cost of eating out is the simplest way to reduce food spending. Also, moving to an area with cheaper rent or buying a home is a great way to save on housing costs.
- Depending on where you live, housing costs can take a big chunk of your income. Experts recommend that you shouldn’t rent a home that costs more than a third of your gross income. [12] X Research Source
- Note that the cost of living is entirely dependent on the local financial situation. You can live a few months on just $1,500 in Detroit or Phoenix, but with that same amount of money, you can’t afford a month’s rent in a New York apartment. If you live in an expensive area, your emergency fund should have more money.
- Besides helping you live well even when your career is tough, an emergency fund is profitable in the long run. If you lose your job and don’t have an emergency fund, you can take any job even if it doesn’t pay well. On the other hand, if you can live without working for a while, you will have more options and more likely to get a higher paying job.
- Once you’ve covered the important things and accumulated a reasonable emergency fund, you can completely deduct most of your salary to pay off the debt. On the other hand, if you don’t have an emergency fund, you have to split your income into two parts, one to pay off your monthly debt and the other to put into an emergency fund.
- If you’ve borrowed from multiple places and it’s overwhelming you, learn how to consolidate debts. You can pool your debts into one lower-interest loan. It is important to note that the maturity of this consolidated debt may be longer than the original debt.
- You may want to try negotiating with a lender for a lower interest rate. If you go bankrupt, the lender won’t benefit either, so they can lower the interest rate for you to pay off the debt.
- Get more information to pay off your debt.
- When you get paid, you’ll be in the mood to shop right away. To avoid this situation, deposit money into a savings account as soon as it is paid . For example, if you save 10% of your income and get paid 8 million dong, immediately deposit 10% or 800,000 dong into a savings account. This habit helps you avoid unnecessary spending and accumulate a decent amount over the years.
- A better idea is to automate the saving process as much as possible so that you don’t even have to hold your money to spend. For example, you can talk to your employer to set up an automatic savings system through a bank or an intermediary application. In this way, you can transfer an amount or percentage of your salary to your account without any effort.
- For example, buying a chair to sit in is not really necessary, but this is a wise long-term choice because it helps you work more productively and reduces back pain (this disease costs more money to treat). . Another example is replacing an old, broken water heater. Although the old machine can still be used for a while, buying a new one will save you money in the long run.
- Other examples include spending that helps you get around for less, like buying a monthly or yearly transit pass, productivity tools like headphones if your job requires it. have to use hands, buy items that make work easier such as shoe insoles to increase height.
- Luxury spending includes all items and services that are unnecessary and do not provide long-term benefits. They can be dining out at a fancy restaurant, going on vacation, buying a new car, cable TV, expensive gadgets, and so on.
Advice
- If you receive an unexpected amount, save it all but continue to deduct your savings as usual. You will reach your goal sooner.
- Everyone can save something even if it’s not income. Starting to save little by little will help create the habit of saving. Even 100,000 VND per month will help you understand that you don’t need to spend that much money.
- Always estimate overspending and below- normal income.
- Preservation of personal property. That way you don’t need to replace items often. Also, don’t throw things away until you really don’t use them anymore. For example, if the electric toothbrush is damaged, you can still use it to brush your teeth like a regular toothbrush. Continue using it until you buy a new one, or check the warranty.
- Shop with cash, don’t use change, save change. Use a piggy bank or a glass jar to store change and coins. You think change is not worth much, but they will accumulate over time. Some banks provide automatic coin counting machines. When you exchange coins, ask for payment by check so you won’t be tempted to spend money.
- If your income is stable, setting a budget will be easier. With variable income, it’s hard to predict expenses, because you don’t know when you’ll get paid. List a budget to accomplish an important goal first. You have to spend carefully because it will be a long time before you receive your salary.
- Reasonable spending for your hobbies. An important habit to save is if you have a hobby of collecting model airplanes, scrapbooks, racing bicycles, diving, etc. Set hard and fast rules even if you allow yourself to spend your money for fun, you still need to spend it in line with your savings. For example, if you buy 1 million VND driving gloves, put the remaining 1 million VND in a savings account.
- Are you serious about saving? Try doubling your savings! This savings plan will do two things: save money often and quickly, see how much you spend on pleasure, when it costs you twice as much.
- If you can afford to share what you have, from food to living space to appliances in your home, go for it. You can find people to live with, close friends, for example, to save costs for both.
Warning
- If things get messed up, don’t give up. Try to do better next time you get paid.
- Don’t spend like “throwing money out the window”. You’re tempted to get a paycheck and can’t resist it. You should only buy things that are pre-determined.
- After a long work week, you want to enjoy luxurious service and say to yourself “I deserve it”. You should remember that the things you buy are not gifts for yourself, they are exchange, exchange of money for products. Of course you deserve it, but can you afford it? If you can’t, you’re still valuable and worthy of reaching your savings goal!
- Unless your financial situation is really draining, you shouldn’t cut back on health-related expenses. Preventive care for yourself, your family, and pets can cost 1 million VND to the doctor’s office or 600 thousand VND to prevent heartworm, but ignoring the above steps will lead to serious consequences and even death. spend more money.
- If you’re spending your savings with friends, be prepared to tell them why you can’t go out.
This article was co-written by Ara Oghoorian, CPA. Ara Oghoorian is a financial accountant (CFA), financial planner (CFP), certified public accountant (CPA) and founder of ACap Advisors & Accountants, an accounting and wealth management firm. Packages in Los Angeles, California. With over 26 years of experience in the financial industry, Ara founded ACap Asset Management in 2009. He previously worked for the Federal Reserve Bank of San Francisco, the US Department of Treasury and the US Department of Finance and Economics. Republic of Armenia. Ara holds a bachelor of science degree in accounting and finance from San Francisco State University, is a banking ombudsman working through the Federal Reserve Board of Governors, holds a specialist degree in financial analysis (CFA) , a financial planner (CFP), holds a certified public accountant (CPA) degree and holds a Series 65 license.
There are 13 references cited in this article that you can view at the bottom of the page.
This article has been viewed 15,644 times.
Saving money is much easier said than done; Everyone understands that saving money is a wise choice, but it is difficult to implement. Saving money is not simply spending less, but it can also be seen as a challenge. Smart savers need to consider how they spend their money as well as maximize their income. Please read the article below for more details.
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