How Do You Save Money That Month After Month You’ll Be On Top?
Twelve years ago, I couldn’t give advice to others on this subject.
At that time, I had to borrow so I could go from one month to the next. I was spending more than I was earning. Once a year, I would go and borrow from the school union’s Mutual Help House and spend the money on clothes, or other small stuff, and then I paid installments.
When summer came and I spent all the money I got for the vacation, I had to either take out another loan or look for a part-time job.
I didn’t have a money discipline. I felt frustrated. I didn’t understand how others managed their money, so they could save on vacations, enjoy life.
I wanted to save money, but I didn’t know how. Even if I managed to save something in one month, the next month I was spending it.
Then something changed. By the summer of 2010, I discovered the books on personal development. The first book I read was Robert Kiyosaki’s book Rich Dad, Poor Dad.
Reading it I understood the principle that first, you have to pay yourself. But I got things wrong. By paying yourself, I thought that you have to buy what you want, only then pay your bills. So, for a while I formed the pattern of paying the bills late because I wanting to indulge myself, I was buying everything I wanted.
It took a while before I understood what Kiyosaki meant about this principle. It’s about the habit of saving first you get the money, then use the rest for other things. By the end of the month, you can deal with the rest that stays, after you save.
Do you think I made it on the first attempt? Not. New habits are hard to form and need reinforcement, hardening over time, sometimes daily.
In the book Secrets of Mind of Millionaire, T. Harv Eker talks about dividing the money you receive into several categories.
Thus: 10% of the income to devote to savings, 10% to donations, 10% for health projects, 20% for investments, and only after that the rest can be used for daily living.
When you have the pattern of going from one debt to another, such a principle strikes you and you think that it is impossible for you to do such a thing. How could you handle 60% of what you earn, as long as you can’t handle all your income?
Some people think that to make serious savings, you have to make serious sacrifices and start with a large amount of money from the beginning.
If you do that, breaks occur in your habits and the mind begins to rebel. At the slightest unfulfillment, you’ll start spending the money, because you’ve worked too hard anyway.
That’s why you need to start with a little bit until your mind gets used to the idea. It is important to form your habit first.
From everything I’ve read, to form a new habit, you need a range of 21–66 days.
Today I’m going to give you some solutions that I’ve tried or just read about in other books.
Save one dollar a day.
It’s the technique I disciplined myself with. I’ve made savings in my country’s currency (1 leu/day), it’s less than a dollar, but so is the income compared to the US.
Daily, you put a dollar in a cardboard box, or in a jar. After a month, you got 30 bucks. Keep records in a calendar or in your daily agenda.
At the end of a year, you have $365.
Where do you get that dollar a day? Check where your money’s going. Maybe you usually drink 2–3 coffees a day. See if you can give up one. Maybe you’re used to smoking a pack of cigarettes a day. You can reduce the number of cigarettes to 15 instead of 20 per day.
I’m not saying give up everything, because, after a few days, the brain starts to feel like it’s losing. I say reduce consumption to save.
In this way, you satisfy your habits, and you also save money and create a new habit. You’re fooling the brain a little bit.
Maybe the amount seems very small to you. It’s better than nothing anyway.
However, more important than the money raised is the HABIT OF SAVING.
What can you do with $365 in a year?
If you are from Romania, this amount is about the equivalent of something more than the minimum wage on the economy.
If you don’t have enough money for something that you desire, you can continue next year until you get the money.
Each new month increases the amount you save by another $1 per day
Because the habit is more important, you can gradually increase the amount you save.
The first month you start with a dollar a day. At the end of the month, you have 30 bucks. In the second month, you add a dollar to the first dollar you’ve saved. At the end of the month, you saved another $60. In the third month, you add another dollar a day and you get to $90 a month… In the twelfth month, you get to $12 a day, which is about $360 a month.
By continuing this way, you end up saving $2,340 in a year. Now you already have a nice amount of money to be proud of.
Next year, you can continue with $12 a day or continue adding a dollar a day for every month you begin.
Monthly, doubles the amount of money you save
Another way to save is to double the amount of money, monthly.
This method suits people who have high incomes but fail to save. Start with a small amount of money until the habit is installed, then every month, double the amount you save and by the end of the year, you already feel comfortable with the process and the higher the amount saved, the more you start to be confident that you can do it.
This method is also suitable for those with rising incomes, perhaps in the form of commission from sales. By setting out such a plan, one forces oneself to achieve higher levels of income so as to save more.
First month with a $1 / day = $30
Second month with $2/ day = $60
Third month with $4/ day = $120
Fourth month with $8 / day = $240
Fifth month with $16 / day = $480
Sixth month with $32 / day = $960
Seventh month with $64/day = $1920
Eighth month with $128/day = $3840
Ninth month with $256/day = $7,680
Tenth month with $512/day = $15,360
Eleventh month with $1024/day = $30,720
Twelfth month with $2048/day = $61,440
At the end of a year, you can save $122,850.
If you’ve reached a certain level that is a maximum per day, you can continue with that value. Let’s say you can’t get more than $256 a day. Continue with this value.
Maybe you can’t reach the total amount you’ve planned. That’s not what’s important, but the fact that you don’t stop and continue with the amount that’s comfortable for you.
Start at 1% per month, then double the percentage every two months
So far, I’ve been telling you about daily savings, because that’s how it was comfortable for me until the habit set in.
After getting used to saving daily, I turned to monthly savings as a percentage of my income.
In this model, I talk to you about monthly savings, which you make when you receive your salary.
It’s proven that if you can handle an amount you get every month, you might as well manage 10–20% less than you get.
However, to accommodate, you start at 1% per month, then every two months you double the percentage.
Suppose you have a salary of $1,000 a month.
Thus, in the month 1–2, you save $10/month (1%), in the month 3–4, you save $20/month (2%), in month 5–6, you save $40/month (4%), in month 7–8, you save $80/month (8%), in month 9–10 you save $160/month (16%), in month 11–12 you save $320 / month (32%).
32% is already quite high, but for two months you can handle it. At the end of the year, you saved $1,260. It’s more than a monthly salary. After the year passes, you can switch to an average of 10% or continue with 30% of your income.
Save 10% every month
Another method I have been using for a few years, after installing the habit of saving, is that I save 10% of my income every month.
If you have $1,000 in revenue, 10% is $100. The moment you receive the money, you put it away, in another account, or in an envelope, where you are comfortable. At the end of the year, you have $1200 saved.
If your income is $3,000, you save $300 every month. At the end of the year, you have $3,600 in savings.
Think about which is the best option for you and start saving. Even if the amount is quite small at first, along the way it will increase. Being on the plus side gives you a sense of confidence that you can.
What happens if in a month instead of saving you spend your savings?
Something like that happens. We all have better or less good days. But the important thing is that if that happens, don’t blame yourself, don’t whip yourself, don’t feel guilty.
Understand that no one is perfect, that everyone has more difficult times, and move on.
Maybe in a month, you borrowed into the savings you made. Continue saving in the next month. In the end, the process is more important than the amount you obtained.
Obviously, savings can vary depending on your goals. If you want to save for a course, a holiday, to travel to a foreign country, to buy a car or a house. The more money you need, the more stable plan you need.
Remember that the ocean is made up of millions of drops! Every drop counts.
Best regards,
Blogger at Fanautodidact
Author of Patronel and Soriela, a fantasy book for children with self-development.
