Savings is useful money tomorrow.

You may not have control over the government, inflation, or any pandemic, for that matter. However, what you can control are your spending and saving habits. And nothing’s more apt than saving money in today’s unpredictable world.

Also known as financial goals, having savings will make you more prepared for the future. Here are seven effective steps on how to save money.

Step 1: Apply the 50-30-20 rule.

Allocate:

50% for your needs

30% for your wants

20% for your savings or financial goals

Needs include those you can’t live without. Rent, utilities, food, and shelter are some examples. On the other hand, wants include gym memberships, vacations, Netflix, and other memberships to streaming apps, coffeehouse drinks, and designer clothing.

To do this strategy, list your take-home pay. Second, multiply this pay by different categories --- 0.50 for needs, 0.30 for wants, and 0.20 for savings. This amount is the maximum that you can spend for the mentioned categories. Third, track your expenses.

Step 2: Use a virtual envelope.

With a virtual envelope, you can divide your needs-wants-savings categories into more subcategories. If you have more than one bank account, this can work.

Some bank accounts have a feature in which you can divide your goals. Consider these goals as what you need for real-life spending and saving.

The rules are simple. You’re only allowed to spend as much on what you put inside a virtual envelope. Do not spend the excess on other envelopes but add them instead to your savings.

Step 3: Cut or downgrade your services.

You may have that platinum membership to a cable company, but you don’t watch the additional shows that come with it. Or you may have the premium streaming service signed up on but don’t have time to watch it.

This time may be best to cut down or downgrade your services. After all, what use is added service that you can’t enjoy or make use of?

Also, to check where you’re spending, it’s good practice to peruse your credit card bill. You may see something there that you’re not using but is bleeding you money.

With the help of the most popular virtual credit cards, it is possible to monitor expenses, generate spending reports and even reduce potential risks associated with online purchases.

Some bills may not seem much as they may appear as a monthly charge. However, these bills become significant if you calculate the annual equivalent.

Step 4: Lower your electrical bill.

Turn off unnecessary lights. If you need to see objects more clearly, use task lighting instead. For instance, use extra light to see more.

You can also take shorter showers and turn the water off when you’re brushing your teeth or cleaning the house. Have that leaky faucet fixed and have an HVAC service clean your air system.

You may think that unused but plugged electronics have no consumption, but they do. They all bleed energy even if they’re turned off.

Step 5: Invest in life insurance policies, mutual funds, retirement plans, and other financial products.

If you save in the bank, your money will grow. However, if you save on financial products like life insurance policies, mutual funds, or retirement plans --- you may see your money grow at bigger rates.

If you’re insured, you can prepare for an illness, retirement, hospitalization, or death. Mutual funds are helpful too. These funds have better returns than your bank savings account.

They are pooled from people and are then invested in bonds, stocks, or securities. Also, investing in mutual funds carry less risk than investing in the stock market.

Having a 401K is not the only option for saving for retirement. As mentioned, you can also save via a life insurance policy or a mutual fund account. However, having a 401K is immensely helpful. For retirement, the ideal rate to save is pegged to at least 20% of gross income.

Step 6: Avoid using credit to pay bills.

Using credit to pay for bills is like walking into a trap where you’ll lose. You may pay off one loan but take note that you only replace it with another. Consult a financial expert before you transfer your loan to another institution.

In addition, be aware of any fees that you’ll have by paying bills with credit. At the most, use credit only for services that have 0% interest or those without convenience fees. Use a credit card only if you can pay off the balance each month.

Step 7: Cut down on online purchases.

Consider cutting down from ordering online for your takeout food. You may love your Mediterranean, but if you want to save money, cooking your version of the paximadia can save you lots.

If you love Amazon and have noticed that you’ve been buying unnecessary things or novelty items, consider delaying the need to buy them for 24 hours. If you lose the urge to purchase these items, then you don’t need them.

If you’re on a tight budget, you don’t have to respond to reckless buying sprees brought about by frugal fatigue. You don’t want to be ambitious, get tired, and spend it all in one go.

Takeaway

There are a lot of ways to save money --- be it slowly but surely. The most important thing right now is to take that first step.