save money

The Ultimate Guide to Saving Money and Maximizing Your Income


Saving money is one of those things that are so easy to say and yet so difficult to do. Everyone knows it’s smart to save money for the long term, but many of us just find it hard. Smart savers also need to know how to properly spend the money they have and how to maximize their income. Start with our first step to learn how to set realistic goals, monitor your spending, and get the most out of your money over the long term.

Save money wisely

Pay yourself money first.

If you want to be on the safe side when it comes to saving, you should make sure you don’t have an opportunity to spend money recklessly. Make sure that a certain proportion of your monthly income doesn’t even make the detour via your checking account, but instead goes straight to a savings account or a pension fund. This saves you a lot of stress because you don’t even have to think about how much money to put aside and how much to keep for yourself. You simply save automatically, and you can freely dispose of the money that ends up in your account. Putting even a small portion of each wage into your savings account will add up to a pretty penny over time (interest included), so start as soon as possible so you can get the maximum profit. Talk to the payroll clerks at your company about an automated savings plan. If you have bank details for a savings account, you shouldn’t have a problem setting up an automated deposit process. If for some reason you can’t auto-deposit your savings account (e.g. you work as a freelancer, are self-employed, or get paid almost entirely in cash), then decide on a specific amount you want to save each month and pay consistently enter this manually into your savings account.

Don’t take on new debt.

Some debts are unavoidable. Only the very rich can afford to pay for a house out of petty cash. But millions of people can only afford a house because they take out a loan that they gradually pay back. Basically, you should avoid debt if at all possible. In the long run it is always cheaper to pay for things immediately than to pay off a loan with interest. If a loan for a purchase cannot be avoided, then at least make the largest possible down payment. The more you can pay immediately, the faster you can get out of debt and the less interest you have to pay. While everyone’s financial situation is unique, most banks recommend that payments on debt should account for around 10% of gross income. Anything under 20% is fine, and around 36% is the absolute ceiling for reasonable debt repayment.

Set yourself reasonable savings goals.

It’s a lot easier to save money when you know what you’re saving for. Set achievable goals to motivate yourself to make the tough financial decisions necessary to reach your goal. You will only achieve big goals, such as buying a house or retiring, years or decades later. In these cases, it is important that you regularly monitor your progress. If you want to see how far you’ve come and how far you still have to go, you have to step back and look at the big picture. You don’t achieve big goals like retirement overnight. Financial markets can change fundamentally in the time it takes to achieve these goals. Therefore, before you set your goals, you should spend some time studying future predictions for the markets. For example, if you’re just starting to make money right now, most financial experts would estimate that you’ll make around 60-85% of your current income will need to maintain your standard of living in retirement.

Set a time frame for your goals.

Setting ambitious (but always reasonable) time limits for your goals can be a great motivator. Let’s assume that in two years you want to be well on your way to your own home. In this case, you would need to find out the average cost of a home in the area you would like to live in. Then you need to start saving for the down payment. Down payments for properties often have to be up to 20% of the purchase price, which is quite a lot. So if we assume that a house like yours in the area where you want to buy it costs 300,000 euros, you would have to save at least 20% of 300,000 euros, that is 60,000 euros in two years. Depending on how much you earn, that may just be impossible. Time limits are especially important for essential short-term goals. For example, if the transmission in your car needs to be replaced but you can’t afford the repair right now, you need to save up the money for it as soon as possible so you don’t end up stranded on your way to work. An ambitious but realistic time limit can help you achieve this goal in a short amount of time.

Create a budget It’s easy to set an ambitious savings goal, but if you don’t have track of your spending, it will be difficult to achieve those goals. To keep your financial progress on track, you should create a budget at the beginning of each month, taking into account your income. You’ll be less tempted to spend money needlessly if you’ve already budgeted a certain amount for fixed costs and other expenses before you even have the money in your hands. If possible, pay everything as soon as you get money so that you don’t become weak and spend the money elsewhere. For example, if you earn 3,000 euros a month, your budget could look like this: Housing/ancillary costs: 1,000 euros Student loan: 300 euros Grocery: 500 euros Internet and telephone: 70 euros Gasoline: 150 euros Savings: 500 euros Other: 200 euros Luxury: 280 euros

Note your expenses.

Anyone who wants or needs to save money is on a pretty tight budget. However, if you don’t monitor your spending, it could become difficult to manage. If you make a note of exactly when you spent how much money, you can clearly identify any “problem areas” at the end of the month where you have to be even more careful to stay within your budget. Pay attention to every detail in your notes. Generally, everyone should be keeping track of their expenses for things like housing and debt repayments, but the tighter your financial situation, the more you need to pay attention to every little expense. You may find it useful to carry a small notebook with you all the time. Get in the habit of writing down expenses immediately and keeping the receipt (especially for larger purchases). When you have time, transfer your expenses to a larger notebook or spreadsheet for long-term archiving. There are also many different mobile apps these days that you can use to keep track of your spending. You can even download and use some of them for free. If you’re having a really hard time spending less, keep every receipt. At the end of the month, you sit down and divide your expenses into different categories. You’ll be shocked when you see how much money you’ve spent on pointless stuff, and it might be a very healing shock.

Check your expenses.

Always ask for an invoice when you shop in person and print the invoice for online purchases. Check that you have not paid too much or for goods that you did not order; you’ll be amazed how often this happens. Let’s say you’re at a bar with friends and one of them orders margaritas for the whole group; make sure that these do not also appear on your bill. Also remember that if you are too generous, you can fall into a deep financial hole. Just as a friendship, you shouldn’t split a bill in half if you’re eating. If your friend’s percentage is higher than yours, do the math carefully. Download an app to calculate the tip accurately.

Start saving as early as possible.

Money stashed away in a savings account tends to earn a certain percentage of interest over time. The longer the money stays in the savings account, the higher the interest rate. So it can only be to your advantage if you start saving as early as possible. While you may only be able to deposit a very small amount each month while you’re young, do it anyway. Small amounts of money sitting in a fixed interest savings account over a long period of time can eventually multiply. Let’s say that in your twenties you had to get by with low-paying jobs, but you managed to save a total of 10,000 euros, which you invested in a savings plan at 4% interest. After five years you have earned 2,166.53 euros in this way. If you had put the money aside just a year earlier, you would now have about 500 euros more without having to do anything for it. This is a small but not insignificant difference.

Consider investing in a retirement fund.

While you are young, energetic and healthy, a retirement fund seems very far away and many people don’t give it a second thought. But as you get older and run out of breath, it may be all you can think about. Unless you are one of the lucky few who have inherited a considerable fortune, then you should also think about your pension as soon as you have both feet firmly on the job – the sooner, the better. As noted above, although each case is individual, it is advisable to plan on 60 to 85% of your annual income for each year of your retirement to maintain your standard of living. If you haven’t already done so, talk to your employer about a company pension plan. A certain amount of your gross salary is automatically invested in your pension scheme. The state offers many tax breaks and other advantages for this. Note the maximum amounts eligible for funding and their annual adjustment.

Be careful when speculating in the stock market.

If you’ve saved well and have a little extra cash to spare, then the stock market is a lucrative — albeit risky — way to grow your money. Before you invest in stocks, however, you should be aware that you could potentially lose anything you invest forever. This is especially true if you actually have no idea what you’re doing. So don’t consider stocks as a long-term savings method, but see them as an advanced gamble and only invest money that you can afford if in doubt. Normally, you don’t need the stock market at all to make sensible provision for your retirement. Educate yourself thoroughly on how to make smart decisions in the stock market. Spread your risk by investing in a diversified ETF. A well-known example of this is the MSCI WORLD. It includes all public companies in the world.

Do not get discouraged.

When you’re struggling to save money, it’s easy to lose your nerve. Your situation may then seem hopeless – it’s almost impossible to save enough money to reach your long-term goals. But no matter how small you start, it’s never too late to start. And the faster you start, the faster you can secure your future financially. If your financial situation seems hopeless, talk to a debt counseling center. These agencies, if they are reputable, should be very cheap or free. They are there to help people learn how to manage their money better in order to be able to meet financial obligations. You can find addresses and telephone numbers on the Internet.

To cut costs

Eliminate all luxury from your budget.

If you’re having a hard time-saving money, this is the place to start. Many things that we take for granted to spend money on are anything but necessary. If you want to improve your financial situation, then eliminating luxury from your life is a very good first step. That doesn’t particularly limit your quality of life or your work. You may find it hard to imagine life without your old gas guzzler or your cable hookup, but you’d be surprised how easy it actually is once you get the hang of trying. Here are some suggestions on how to reduce your spending on luxury goods: Cancel unnecessary TV and Internet packages. Switch to a cheaper cell phone plan. Trade your expensive car for one that uses less fuel and is cheaper to maintain. Sell ​​electronic devices that you don’t use. Buy clothes and furniture at the thrift store.

Find a cheaper apartment.

For most people, housing costs are the largest single item in their budget. Because of this, you can free up a significant amount for other important things, like your retirement savings, by saving on housing costs. It’s not always easy to make quick changes to your home, but if you’re having real budget issues, it’s worth considering. If you rent, you may be able to negotiate a slightly lower rent with your landlord. Most landlords don’t want to take the risk involved in finding new tenants, so if you have a good history with your landlord, you stand a chance of getting a better deal. Maybe you can also take on smaller tasks in the house or garden for a reduced rent. If you have a mortgage to pay off, talk to your lender about refinancing the loan. You may be able to negotiate a better interest rate if you’ve been reliable in the past. Always try to keep the terms for the refinancing as short as possible. You might even be able to move to a cheaper city.

Eat cheap.

Many people spend far too much money on groceries. It’s easy to forget your resolutions to be more frugal when you’re enjoying a lovely meal at your favorite restaurant. But unfortunately, the cost of eating and drinking adds up particularly quickly when it gets out of control. Basically, it is cheaper to buy larger quantities, so watch out for special offers for bulk packs and hamster purchases. Dining out is obviously the most expensive option, so make sure to eat at home as much as possible to save on costs. Eat cheap but with high nutritional value. Instead of buying ready-to-eat meals, take a tour of the produce department next time you’re shopping. You may be surprised how cheap it is to eat healthy. For example, brown rice is a filling and nutrient-rich food that is usually available at a bargain price. Watch out for special offers and promotions. Many grocery stores, especially large supermarket chains, offer discounts and coupons, don’t let them expire! You can also use coupons from the Internet when shopping online. (e.g. If you eat out regularly, stop immediately. It is generally cheaper to prepare a meal at home than to order something similar in a restaurant. If you cook regularly, you’ll also learn a useful skill that you can use to please friends, please your family, or even impress on a date. If your situation is really serious, then don’t be afraid to take advantage of free offers as well. The food banks, soup kitchens and similar facilities offer people free meals for the needy. If you need help, contact your local social welfare office for more information.

Reduce your energy consumption.

Although most people are annoyed, they simply accept the amount that regularly appears on their electricity bill. It is possible to drastically reduce your energy consumption and associated costs if you follow a few simple rules. These tricks are so simple that there’s no good reason not to use them if you want or need to save money. Not only are you doing something good for yourself, you are also improving your personal environmental balance. Turn off the light when you’re not around. There’s no good reason why you should leave the light on when you’re not in the room or even the house, so just flick the switch when you leave. It is best to stick a note on the front door so that you are reminded when you leave the apartment. Turn off air conditioning and heating whenever possible. If you’re too warm, open a window or use a small fan. To keep warm, wear layers of clothing, cover up, or use a small heater. Invest in good insulation. If you can afford to invest in a substantial renovation project, replace the old and likely leaking insulation on your walls with highly efficient, modern insulation technology. This saves you money in the long run by keeping the warm or cool air inside your home. If you can, invest in solar panels as well. If you are serious about investing in your future and that of the planet, you should consider solar panels. Installation costs are still quite high, but solar energy is getting cheaper every year.

Use cheaper means of transport.

Owning a car, maintaining it, and filling it up regularly can cost you a good chunk of your income. Depending on how much you drive, you end up spending hundreds or hundreds of dollars a month on gas. There are also costs for insurance and repairs. Instead of driving yourself, you should opt for a cheaper or free alternative. This not only saves money but also everyday stress on the freeway, and it also gets you in physical shape, even if you only have to walk to the next stop. Research the public transport options in your area. Depending on where you live, there may be countless public transport connections available to you. Most major cities have subways, trams, suburban trains and bus lines criss-crossing the city, and even medium-sized cities now have mostly good bus connections and at least one train station. Consider walking or cycling to work. If you live close enough to work, these are both great ways to not only save money on your commute, but also get some fresh air and keep moving. If you can’t do without a car, at least think about carpooling. This way you can share the cost of fuel and maintenance. Plus you have someone to talk to on the way to work.

You can also have fun cheaply or even for free.

If you want to reduce your personal expenses, it can mean that you eliminate all reckless luxuries from your life without replacement. But that doesn’t necessarily mean you can’t have fun anymore. All you have to do is change your leisure habits and look for cheaper alternatives, and you will achieve a perfect balance between fun and responsibility. You’ll be amazed at how much fun you can have for so little money if you use it wisely! Stay up to date on events in your city. Most cities and even smaller towns these days have an events calendar for upcoming events in the area. And such events, which are organized by the city or local clubs and associations, are usually very cheap or even free. In medium-sized cities, for example, you can often see exhibitions, watch films in parks at open-air cinema events, or participate in fundraising rallies. read Compared to movies and video games, books are cheap (especially if you buy them used). A good book can completely absorb you and you can experience a different life through the eyes of exciting characters or learn new things that you would never have known otherwise. Have fun doing cheap activities with friends. There are endless ways you can have fun with your friends that cost little or no money. Go on a hike, have a game night, watch old movies, take a stroll through a neighborhood you’ve all never been to, or play sports together.

Stay away from expensive addictions.

Certain bad habits are totally incompatible with your savings plans. In the worst case, bad habits become addictions that you can’t get rid of without help. Even worse, many of these addictions are very harmful to your health in the long term. So spare your wallet and your health the trouble and stay away from drugs and other addictive substances and habits in the first place. Do not smoke. Today we know only too well what harmful effects smoking can have. Lung cancer, heart disease, stroke and many other serious diseases are proven to be primarily caused by smoking. Cigarettes are also expensive – a pack can now easily cost 5 to 7 euros. Don’t drink alcohol excessively. A beer or two with friends certainly can’t hurt, but regular and/or excessive drinking can lead to serious problems over the long term: liver disease, impaired brain function, weight gain, delirium, and even death. Quite apart from the fact that alcohol addiction can also mean a huge financial burden. don’t do drugs Drugs like heroin, cocaine or amphetamines are very addictive and can have a variety of very harmful or even fatal effects. They are also much more expensive than alcohol or tobacco. Celebrity cocaine addicts have been known to spend more than $1,500 a day on their cocaine addiction at times. If you need help breaking an addiction, don’t hesitate to call an addiction counselor. You can find the corresponding numbers on the Internet or in the telephone book.

Spend money smartly

Spend money on absolutely necessary things first.

When it comes to spending your money wisely, there are some things that simply cannot be done without. These are food, water, housing and clothing. These things are top priority. Being homeless or starving will make it difficult for you to meet your financial goals, so make sure you always have enough money to meet those basic needs before you put your money into other activities. While food, water, and shelter are important, that doesn’t mean you should splurge on them. For example, you can drastically reduce the cost of your meals if you only cook and eat at home. You could also move to a cheaper neighborhood where you pay less rent. Depending on where you live, housing costs can eat up a large portion of your income. Typically, experts advise against moving into an apartment that will cost you more than a third of your regular income.

Next, you create an emergency fund.

If you haven’t already set aside money for emergencies so you can survive if you suddenly lose your income for whatever reason, start doing it now. If you have put aside a decent amount with a safe deposit, you can remain much more relaxed if, for example, you should lose your job. After you’ve taken care of the essentials, you should use a good chunk of your income to add to that savings pool until you’ve saved enough to last you for about three to six months. Keep in mind that living expenses can vary depending on the local financial climate. In some places you can live quite comfortably with 1500 euros per month, elsewhere it is not even enough to pay the rent for a tiny apartment. If you live in an expensive area, your emergency fund needs to be a little bigger. On the one hand, such a cushion gives you the peace of mind that life will go on if you should get into job difficulties, and on the other hand, it can also make you money. If you lose your job with no savings, you may have to immediately accept the first job that comes your way to make ends meet, no matter how poorly paid it is. However, if you can live off your savings for a while, then you can afford to be a lot more selective about your next job and only take a position that pays well.

Next, pay off debt.

If you have outstanding debts, they can seriously jeopardize your savings plan. If you only ever pay off your debt with the minimum monthly amount, you will end up paying a lot more than if you get it over with as quickly as possible. Save money in the long run by using a decent chunk of your income to pay off any debt you may have, so you can get out of debt as quickly as possible. Basically, of course, you should pay off the most expensive loans first if you don’t want to throw your money out the window. So once you’ve secured your basic needs and saved up a nice nest egg, you can invest almost every extra dollar into paying off your debt. If you don’t already have a nest egg, you should consider splitting up your available financial resources. You use half of it to pay off your debts, and you save the other half. If you have to repay money to several creditors and the burden threatens to overwhelm you, it can make sense to pool your debts. Maybe you can get a cheap loan that will pay off all your outstanding debts so that you only have to pay one installment a month from now on. However, the terms of such loans are sometimes much longer than your original loans. You can certainly try to agree a lower interest rate directly with your creditors. It doesn’t do your creditor any good if you go broke, so many will agree to lower rates or interest rates just to get their money. Read the wikiHow article Get Debt Free

Now it’s time to save.

Once you’ve scavenged an emergency dime and paid off all or most of your debt, you’ll want to start putting your available money into a savings account. The money you save this way is different than what you have in your emergency fund. You only want to use the latter in an absolute emergency, while the savings you’re accumulating now are for necessary major purchases or expenses — like repairs to the car you need to get to work. Basically, you should not spend this savings carelessly either, so that it will increase over time. You should aim to save about 10-15% of your monthly income from about the age of twenty to twenty-five. Experts say that’s a reasonable goal. There’s a great temptation to make impulse purchases when you’ve just received money. To prevent this from happening, pay the monthly amount into your savings account as soon as you receive the money. If you want to save 10% of your income and you get 710.00 euros in wages on your account, then pay 71.00 euros into your savings account. This way you avoid spending money unnecessarily and you accumulate a considerable savings balance over the years. It’s even better if you automate the saving process as much as possible so that you don’t even see the tempting money in the first place. For example, talk to your employer about whether there is a company savings plan for which a fixed amount can be immediately deducted from your wages each month before it is transferred to you. You can also use an app or arrange for the bank to transfer a percentage or partial amount of each incoming payment into a separate savings account.

Now you can buy things that are not absolutely necessary but very useful.

If you still have money left after all your necessary expenses and your reserves, then you can invest money in certain things that are not necessarily essential but increase your productivity or significantly improve your earning potential or your quality of life. These purchases and acquisitions aren’t as important as food, water, and housing, but they can still be worthwhile purchases if they help you save money in the long run. For example, it is not necessary to have an ergonomically designed chair at work, but it can still be worthwhile because the result is less back pain (which, by the way, can also become an expensive problem) and, as a result, you can work better, longer and more efficiently can. Another example would be that you could replace your old and outdated water heater with a more modern and energy efficient solution. The old one might still work, but it might need to be repaired soon anyway, and it uses far too much energy. There are countless other examples: Anything that makes your way to work cheaper, such as monthly or even annual tickets for local transport, tools that allow you to work more efficiently, such as a telephone headset so that you can have your hands free when making calls, or gel -Insoles for your shoes so you can stand pain-free for long periods of time.

Luxury goods come last.

Saving money doesn’t have to mean living on water and bread. Once you’ve paid off your debts, saved up a nest egg, and made some useful purchases that will pay off in the long run, it’s finally time to spend on yourself. Reasonable luxuries are important when you’re working hard, so don’t be afraid to treat yourself to celebrate the day once you’ve got your finances in order. Luxury is anything that isn’t necessary and doesn’t serve a long-term purpose. It can be a trip to a great restaurant, a vacation, a new vehicle, cable TV, expensive tech toys, and much, much more.


About the Author

Karren Brandenburg

Karren Brandenburg is a travel and shopping expert. She has been quoted in Street Insider, Yahoo Finance, Reuters, ABC News, and MarketWatch. Karren has a total of 18 credit cards, using reward points to see the world on a budget.