Have you recently experienced the feeling of "your paycheck just passing by"? If so, this article might be for you! To prevent this situation from happening again, you need a proper strategy for saving money and effective financial management that suits you.
In fact, saving money doesn’t mean you have to live a hard life. By making small changes in your habits, you can save more so your salary or income doesn’t just "pass by."
So, what can you do to break free from the habit of overspending and live more frugally? Here are some tips recommended by the BFI Finance team!
1. How to Save Money Effectively
1.1 Create a Careful Spending Plan
The first way to save money is by setting up a detailed spending plan. Break down your expenses specifically, from major expenses to the smallest ones. Some costs often overlooked in monthly financial planning include transportation costs like fuel, daily costs like buying coffee and snacks, personal care expenses such as haircuts, and emergency funds. It's also important to differentiate between what’s truly a need and what’s just a want.
1.2 Use Cash
The second way to save money is by using cash for all your purchases. With cash, you can better track how much money you’ve spent over time. This helps curb unnecessary spending.
1.3 Use a Dedicated Expense Account at Your Bank
If you prefer going cashless, you can create a dedicated account for your monthly operational expenses. Nowadays, many digital banks offer features that allow you to separate costs according to your needs, like personal savings, travel, entertainment, and emergency funds. Make the most of these features.
1.4 Set Priorities
Another way to save money is by setting priorities. Not all expenses are equal. Prioritize your basic needs first, like transportation, food, and housing. Once those are covered and you have extra money left, you can consider buying things you want. If not, postpone your purchase or look for cheaper alternatives.
1.5 Minimize Scrolling on E-Commerce Platforms
One important way to save money is by minimizing time spent scrolling through e-commerce platforms. Online shopping can be addictive and easily accessible, but if used unwisely, it can ruin your spending plan. Start reducing your e-commerce browsing gradually, and prioritize other necessary expenses. Before shopping online, make a list and compare prices across different platforms to avoid impulsive buying.
1.6 Save a Portion of Your Income
Another way to save money is by setting aside a portion of your income as soon as you receive it. After receiving your monthly salary or other income, immediately set aside money for savings. This helps prevent you from spending all your earnings. As mentioned earlier, you can create a separate account specifically for savings.
1.7 Limit Credit Card Use
Limit your credit card usage to help save money. The benefits of credit cards are more evident when used wisely. If mismanaged, credit cards can lead you into bad debt habits. Therefore, limit their use to only essential purchases and always pay off the full balance, not just the minimum monthly payment.
1.8 Buy 'Dupe' Products
If you need something useful but are constrained by the price, consider buying a 'dupe' or replica product. Dupe products are usually cheaper and offer similar functions. According to quorumfcu.org, dupe products are items that mimic the model or function of more expensive brands but at a lower price. Clothing, beauty products, and everyday essentials often have dupe versions with comparable quality but much lower prices.
1.9 Increase Your Income
Another tip is to increase your income. With more earnings, you can save more without having to cut your spending. You can seek additional income from freelance work, selling used goods, or finding a better-paying job.
2. Save Money with the 50/30/20 Strategy
BFI Finance recommends the 50/30/20 strategy as an effective way to save money. Popularized by U.S. Senator Elizabeth Warren, she explains the strategy in her book All Your Worth: The Ultimate Lifetime Money Plan. According to The United Nations Federal Credit Union (UNFCU), the 50/30/20 strategy helps manage finances healthily. It recommends allocating 50% of your income for needs, 30% for wants, and 20% for savings. Here’s a detailed explanation:
2.1 50% for Needs
Allocate half of your monthly budget to essential needs, such as:
- Utility bills
- Groceries
- Rent
Credit card or loan payments can also be classified as needs, which is why it's important to manage them so they don’t dominate your monthly expenses.
2.2 30% for Wants
After covering your needs, you can use up to 30% for wants if necessary. These can include:
- Vacations
- Subscriptions to music or streaming services
- Dining out
- Hobbies
Remember, only spend on wants after fulfilling your needs. If your needs aren’t met, delay these purchases or look for cheaper alternatives.
2.3 20% for Savings
Don’t forget to allocate 20% of your income for savings. You can put this into an emergency fund or investments, but make sure saving doesn’t compromise your ability to meet essential needs.
The above method might not work for everyone, as individual needs and incomes vary. You can adjust the percentages to suit your financial situation. Ensure that your finances remain healthy, plan carefully, and aim to keep your debt below 30% of your income.
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If you need additional funds for your needs, such as covering daily expenses, expanding your business, preparing for your children's education, and more, BFI Finance is the answer. BFI Finance is a non-bank financial company that provides financing with collateral such as Motorcycle Ownership Documents (BPKB), Car Ownership Documents (BPKB), and Property Certificates. Apply for your financing now and enjoy competitive interest rates, high loan disbursements, and a fast application process. BFI Finance is licensed and supervised by the Financial Services Authority (OJK). Apply for your financing at BFI Finance today!
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