Budget Saving & Investing: Zero To Hero In 12 Easy Steps
A guide to money when you don’t have enough
Have you noticed that most of the financial guides and books out there assume you already have money?
Trying to get ahead is difficult despite trying hard and working harder. Many people just can’t do it. But actually, it’s not all that difficult if you plan and educate yourself a little.
Here are twelve powerful habits that can contribute to a stronger financial future.
Journal your spending
Before you do anything else, one of the first things you have to do is work out exactly how much you are spending and, more importantly, what you are spending on.
A journal is a great way to do this. I use a physical journal because it feels more solid. It’s on my computer’s desk. And at the end of each day, I write exactly what I’ve spent money on.
Example of my page
Thursday 15th February 2024
Groceries:
Supermarket: $45 (vegetables, pantry staples, chicken)
Dining Out:
Coffee shop: $5.00 (latte)
Takeout dinner: $25.00 (Thai food)
Transportation:
Bus: $4 for two (to cinema)
Taxi: $15 (back from cinema)
Entertainment:
Movie ticket: $30
Popcorn and snacks: $10.00
Bottle of red wine: $25
Bills:
Electricity: $50.00 (online payment)
Total Spent:
$209
What can I cut from this? The latte, and the taxi home. What I couldn’t cut out would be the movie, Thai takeout, and the bottle of wine because our little boy was sick on Valentine’s, so we moved our arrangements to the next day.
Analyze your spending
I check my weekly and monthly spending to see where I am overspending. And the following month I will try to cut some of the unnecessary expenses. Or if a bill is unusually high, I will try to find out what is going on.
Set financial goals
What are your short-term and long-term financial goals? Do you want to save for something, pay off a debt, or invest in your future?
I invest and trade all my spare money. So saving a bit here and there can soon add up to a share in a stock.
For example: I saved around $100 in September and October simply by buying hash browns, beef patties, and burger buns and making my own breakfast. On the 1st of November 2023, I used the breakfast money to buy one extra share of Starbucks (SBUX) at $91.35.
I sold all of my Starbucks shares a week later on the 8th of November. the price had gone up to $104.30. Giving me a profit of $12.95 on the share. Not only did I save money, but I also made 14.18%.
The reason I gave this example is to show that the money you save on a luxury that you don’t need can go towards a more useful asset.
Create a budget
I have a budget based on my income and expenses, and I’ve allocated specific amounts to different categories each month.
We have a food kitty. We spend a certain amount on food. If there’s money left in the kitty at the end of the month, that money rolls over to the next month. This is so we can reward ourselves for being good little savers.
The $25 bottle of wine came out of the money from the previous month.
Utilities are another aspect that we save money on. Our bathrooms and kitchen have ecology water heaters which save not just gas but also the amount of water that is used. The lights in our home are all LED. The electrical outlets have power-saving and surge-protected strips. These small things all add up over the years and the cost of buying these items is soon made back with the savings.
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Keep reviewing the budget
I have to review and keep track of my budget because my spending can be pretty irregular. Also, I have to remember to be realistic. There’s no good saying I am only going to spend $100 a month on petrol when I have to drive every day.
The importance of want and need
Some things I don’t skimp on, such as entertainment for my children, and their clothing, especially good shoes.
Things I do budget for are things like branded items. A T-shirt is a T-shirt no matter what logo is on it. It’s the same with things like winter hats. Does it keep my head warm? Yes, so who cares who makes it?
I want a branded hat. I don’t need one.
Involve your family or partner
There’s no point in my budgeting if my wife is blowing the savings on sparkly shoes.
This is also something that I am teaching my children.
My daughter loves Disney dresses, but they are pretty expensive for what they are. So we encourage her to look at if I am honest cheaper knockoffs, explaining that she can have either three different dresses or just one dress if it’s made by Disney. She’s four years old and will choose three dresses over one, every single time!
Pay Yourself First
Treat saving like a bill and prioritize it before unnecessary spending. This advice was from the excellent book rich dad poor dad">Rich Dad, Poor Dad. If you haven’t read it, it’s linked above. This is an Amazon Associate affiliate link so I do get paid a little if you buy the book.
Using your savings as a bill is quite a clever idea!
Which brings me to the next part.
Automating your savings and bills
I have a direct debit on my account for all my bills. I also have a recurring payment from my major account to my savings account. I get paid on the 10th of the month. I have set my standing payment to my savings account to occur on the 12th.
Debt Management
After you’ve put money into your savings account or bought a stock, prioritize paying off credit cards and other high-interest debts. Consider debt consolidation strategies if possible. Many banks will give you a consolidation loan to pay all your debts off at once.
Investing and Growth
Learn about investment basics. Investment does not always mean the stock market. There are a lot of investment opportunities out there, from Real Estate Investment Trusts (REITs) to Peer-to-Peer Lending.
A little money goes a long way
Even small investments add up! Some REITs allow you to invest with as little as $10
Invest Regularly. Buying one stock a month or putting $40 into a REIT will soon build up. Most people don’t think this way!
$40 x 12 months is $480. That isn’t a lot of money, but with an annual investment of $480 at a 5% interest rate, you would have approximately $7820.35 after 10 years.
I don’t know about you, but $7k would come in handy.
Investing slowly over time can give you a nice return. Although it might not seem like a lot at first $10 here and $20 dollars there soon adds up.
Summing up the 12 points
Use a journal to analyze your spending
Set financial goals
Create a realistic budget
Review your budget from time to time
Don’t waste money on wants over needs
Get your family involved
Pay yourself first
Automate your savings
Get out of debt
Invest this is an affiliate link to Etoro.
Put little bits away to build your wealth
Save regularly
Thanks for reading! Clap, follow and comment if you want to.
Paul
