In my journey to millionaire success one of the key to achieve millionaire is to save money. However, it’s often easier said than done. This is where the money management comes into play. It depends a lot on being disciplined with our saving habit. There are 6 ways manage your money.
Setting your savings goal
You should always “begin with the end in mind” as Dr Stephen R. Covey puts it in his book, The Seven Habits of Highly Effective People.
To be effective in our savings, we should set a goal and strive towards achieving it. In my millionaire journey I have set many different long-term goals and many short-term goals to save money.
Ideally, you should have a plan or an account for each money goal and commit yourself totally till you achieve them. To do that, make sure your goals are S.M.A.R.T. – it should be Specific, Measurable, Attainable, Realistic and Time-bound.
Pay yourself first
One of the most effective money management skills to saving money is to pay yourself first. Most people have the habit of spending first and saving what’s left only to discover that there’s always nothing left.
We should put a side at least 10 percent of our income each month into a saving account that you will never touch.
For the self-employed, you should then strive to save at least one-third of what you earn.
Every month, make a commitment to pay yourself a fixed amount of money before anyone else. Increase the amount with every pay rise and also pay yourself a bonus at the end of year end. All these money should not be used to support your current lifestyle but be locked in for future use.
Automatic savings program
One way to force ourselves to save more money is to set up an automatic savings program. This is one of the best money management methods. It removes our weaknesses and stay disciplined with our savings as money is taken from our account before it reaches our hands.
There are a couple of ways to set this up and the best one would be via automatic deduction on your pay day. Go to your bank and assign a standing instruction to deduct a fixed amount (about 10% of your salary) every month into another saving account.
If you still have doubts about yourself of not with drawing the savings, then set up a joint account with your spouse or another family member whose consent must be obtained before withdrawals can be made. This would ensure that the amount saved would remain saved till your goals are achieved.
Budgeting is a must for everyone to implement. Without a properly drawn-out budget, our saving program will most likely go haywire. A budget gives us a preview of our cash flows over a period of time and we will know precisely where our money is flowing.
Follow your realistic budget diligently and you will have extra money at the end of the month. Save the money into your long term savings account. Make your savings goals your priority.
Buy Blue-chip share
Once your saving have achieve a certain amount then consider buying some blue chip stock for long term investment. The return from the stock is much higher than the bank interest from the saving account.
If you are not sure which stocks to buy or never buy any share before then consider investing in unit trust fund. It will provide a good return in the long run. Consider also buying the unit trust every month as a way to cushion the up and down of the stock market.
Avoid Credit Card Expenses if you can
Having credit card is important in our budgeting and planning to save money but the overuse will certainly destroy our saving plan.
If possible only use your credit card within your monthly budget plan. If your budget allows you to spend $300 for fuel expenses then use credit card within that limit and pay the credit card at the end of the month with the $300 that you have budgeted. Can you be discipline enough to do that?
Staying disciplined with our savings may seem a Herculean task to many but with a burning desire and a meaningful goal, it will be relatively easy.
We have to understand that time is one of our greatest assets and we can just allow the power of compound interest to work for us, we will surely be able to achieve our desired goals to be a millionaire.
To Your Millionaire Success.