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Saving Money for Beginners – part 4

„Saving Money for Beginners“ is part of a series of articles from our guest author Victor.

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This is part 4 of Victor's series „Saving Money for Beginners“. If you have not yet read the previous parts, you can find these here:

Part 1 / Part 2 / Part 3

As mentioned in my previous article (Part 3), a will of discipline is needed if you want to start saving money. It is not only needed when you start and open your savings bank account. It will be also needed every step of the way.

Let’s review: You have decided that you want to start saving. You have realised that setting a monthly payment for yourself as a way to save money is a good way to begin, and you have also set up a savings account where you will send this monthly payment. By doing this last bit, you will be learning the concept of “cash-flow”, but we will leave this topic for another day. 

Now let’s concentrate and search for every bit of opportunity to send extra amounts of money to your savings bank account.  

Take 10 or 20 mins of your time and reflect on some of the following points:

How much do you spend every day on coffee? Is there a cheaper milk or bottle of water you can buy for your daily consumption? Do you really need to bring your shirts to dry-cleaning every week? Do you need to buy the most expensive pasta when you cook spaghetti?  Do you really need to be subscribed to two different online streaming services? Do you really need to have the largest size of popcorn and coke when you go to the cinema?  

It is very important that you should not lie to yourself, but of course you should not exaggerate and create a negative effect on yourself:  

If that cup of coffee is what “helps” you start the day in a good mood for your job, don’t change anything. Don’t buy the cheapest milk available and endanger your health. Do bring your shirts to dry-cleaning if you need to keep a good image with your colleagues and boss at work. And from time to time, it is just great to reward yourself with popcorn and a cold drink when watching a good movie. 

But have discipline and the will to change small things. 

Most important of all, once you have changed and saved money, take the saved money and send it to your savings account right away. Otherwise, no matter how much you change, it won’t get reflected anywhere.  

This is another quality of a person that saves money, besides discipline: a reaction to your action of saving money.  

Once you have saved, and in the future, once you have cashed in your earnings, DO NOT SPEND IT AWAY! or let it resting on your daily expenses account. Otherwise no matter the effort and strategy in investing and savings, the saved amount will dilute and not count for anything.  

Another small but smart strategy is: each time you arrive home, take away all small change you have left on your pockets and/or purse and put it inside a box, or a jar. Some days be generous, a 5 USD/EUR bill (or equivalent) if you can. 

Don’t lie to yourself: saving cents only, is not going to make much of a difference. I’ve saved cents for 4 years, and when we changed them, it was less than 10 Euro. 

Then there are more examples: birthday money, bonuses, tax returns, selling stuff on eBay, foreign currency you are sure you won’t use anymore, interest on your savings, etc, etc.  

Take this money and move it to your savings account. Have discipline, don’t lie to yourself  and contribute each time you can. You will start getting used to it, and after one or two years it will come automatic. It will be an obligation to yourself. And I can guarantee you will be very happy you did it after 10 years.

 

Have you started saving money yourself? Share your experience with the guanshe community!

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Photo: Victor/Private

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