Most of us, when we receive our paycheck, we spend. Then we save whatever residual.
That sucks. Period.
Soon enough, we realize that our money in the bank is plunging faster than the stock market. Why? We do not keep track on what we spend. We never do, and it is an extremely tough habit to cultivate.
Paycheck in, spend. Any spare cash left, save. That flow of financial planning will screw most of us.
1. Know what you are saving for
Never do things without a reason. It goes the same for saving money. Be clear of what are you saving up for! It can be used to fund your house, your car, children's education, retirement, holiday and whatsoever. Set your own target and clearly define the amount of money you intend to save.
2. Do it once, do it good
I never believe in keeping track of our spending. Some may disagree, but only 1 out of 100,000 people is disciplined enough to record every single spending. Do a breakdown of your fixed expenses, pen it down clearly. Plan with details, how much you intend to save per month. Just do this exercise once and you can stop looking at your personal balance sheet.
3. Save before you spend
First thing when you receive your paycheck. Bank it into a separate bank account. Remember you have commit the amount to save up every month. Make sure you do not touch a single cent of the savings unless you have reached your target.
To summarize:
Know why you are saving.
Plan how much to save.
Save before you spend.
I can guarantee you a rise of digits in your bank account. I have taught this to many friends and it worked 100% of the time.
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