Money won’t save itself if you keep telling yourself to start saving it tomorrow. Let’s begin today!

Create a forced saving environment

There are probably a variety of reasons why you haven’t been able to save money. Have you been blaming this on your lack of perseverance or endurance? If that is so, your way of thinking is incorrect. Saving money should not just stay at the emotional level. Forcing yourself to create a money-saving environment is important. When you decide to go on a diet, you won’t lose any pounds by just thinking about it. You have to decide on your daily intake, and eat only what you should eat instead of any kind of food; eventually, you will lose weight. The same idea applies to saving up money:

STEP 1: Write down all monthly income and expenses.

Write down the current household income. At the same time, write down in detail all your expenses.

STEP 2: Determine the amount of money you want to save.

Next, write down the amount of money you want to save per month. Remember, it’s not the amount of money you can save, but the amount that you would like to save monthly in order to reach your future goal. In other words, you should calculate backwards from your future savings goal instead of writing something like saving twice the amount of your income. For example, if you want to buy a US$10,000 car 2 years later, you will have to calculate how much you need to save monthly counting from today onwards.

STEP 3: Divide your expenses into 4 categories and determine their upper limits.

Then, divide your expenses into 4 categories and decide the necessary amount for each of them:

  1. Cost of living (include rent, food and utilities)
  2. Social costs (tuition, transportation, insurance,  ceremonial occasions)
  3. Entertainment (such as clothes, travel and eating out)
  4. Amount of money you want to save Deduct the amount you want to save from your income, and allocate the remaining amount to the other 3 categories. For example, if your monthly income is US$2,500 and you want to save US$420 per month, the amount will be allocated like this:
  5. US$1380
  6. US$500
  7. US$200
  8. US$420

STEP4: Transfer the determined amount every month to separated accounts

Till this step, all you have to do is to transfer the determined amounts to the 4 accounts each month when you get paid, and just remember to limit your living expenses to the determined amounts. Of course it would be ideal to live off of the same amount of money every month. However, utility bills will fluctuate and events or family occasions will change your monthly expenses. Therefore, the trick is to review your possible monthly expenses each month when you are paid, and adjust them accordingly. By dividing your living expenses into different accounts in this way, you can easily save money every month without placing a finger on that saved money. This will also help you buy only the things you need and reduce the chance of wasting money. Create 4 bank accounts with the divided income and get started with your money-saving life now! The information in this article is from the date of publication, June 15, 2013. Please be responsible and take into account safety and usefulness when implementing article contents.