There are many stories about how a person with a small income did everything possible and impossible to increase his income and not think in the future where to take money before getting the wage. However, with overcoming the next career step and increasing the amount of money, the situation in which you feel a lack of funds again for the whole month did not change. And not surprisingly, because accumulation  ̶  is not about an increase in income as cost control and the correct distribution of funds. We provide TOP-5 tips on how to spend wisely in order to be able to accumulate.

KEEP HOME ACCOUNTING

To keep everything under control, keep records of income and expenses. How to do this depends on your preference: it can be noted in a notebook, an Excel electronic tablet or a special program in your smartphone. If you are actively using online banking, then in your own online cabinet you can keep this account in a separate section. Of course, it’s convenient to keep accounts there if you actively use banking “plastic” and buy goods and services through the Internet.

Some experts advise recording expenses in a general way because very detailed entries in the report of each check take a lot of time and users often quit this activity after a couple of months. Others, on the contrary, are sure that the smallest expenses should be kept, because “the devil is in the details” and often you can save more on trifles and bad habits.

Журнал «Народний банкір» №12/2019

FOLLOW THE DISTRIBUTION STRUCTURE

There is a universal formula for the monthly distribution of income: 50-30-20, where 50% is required for constant payments ("utilities", food, transportation, telephone communications, etc.), 30% for other expenses (clothing, entertainment, short-term training ) and 20%  ̶  savings.  

Savings should also be divided into 2 parts, 10%  ̶  the creation of a financial safety cushion (in case of dismissal, illness, etc.) and 10%  ̶  savings for large purchases. In order to prevent the saved money from depreciating, today classic bank deposits remain the simplest and most accessible ordinary citizens to save and increase them.

The funds that you have allocated for standing payments and other monthly expenses (together with 80% of income) can also work for you. To do this, it is better to put this part of the funds on a deposit immediately after receiving income with the possibility of free replenishment and withdrawal at any time for any amount. For current expenses, you gradually transfer the necessary funds from a deposit to an account in online or mobile banking. And the balance on the deposit will bring you an additional income. At the end of the month, you will receive a small amount of interest that you can spend on mobile communications or a delicious coffee with cake. But if you do not touch these funds, then in half a year you can treat yourself to something more substantial.

To create a financial safety cushion, select the “Accumulative” deposit, which allows you to replenish it monthly both with your own funds and automatic connection of interest, but it does not allow you to withdraw. It helps you not to give in to emotions and not to spend money. It has the highest interest rate and for 5 years (subject to a monthly replenishment of 10% of your regular income) will allow you to create a real reserve.

In order to collect funds for recreation, children's education or a new car, the “Accumulative” or “Profitable” deposit is useful where large interest rates are offered. Note that at high rates it is usually impossible to early withdraw and replenish a deposit.

Of course, everyone redistributes their income, depending on their capabilities, but everyone who cares about his future should create a safety “cushion” that would make it possible to exist for 6 months (this is the time which experts expect on average to look for work in case of loss). In no case, you should risk or lend this amount. A financial safety cushion does not set itself the goal of generating revenue. Its goal is your protection and peace of mind.

USE THE POSSIBILITY TO SAVE

There are simple and effective rules for saving:

Do not overpay. Do not be lazy to learn about the possibility to save. Compare offers on different resources. Choose the best option for the price/quality ratio.

Do not live in debt. Spend according to your income, you don’t always need to have status items that you can’t afford.

Keep track of promos of banks, shops, gas stations, services. For example, if you pay by Mastercard, you can register your card for participation in the rewards program and receive from certificates for purchases in supermarkets to cash gifts.

Keep track of discounts in retail chains, but turn off emotions. Buy what you really need. Do not take not your product, even if it is a 90% discount on it – this is just the way to unnecessary costs.

Buy goods in bulk, or collective purchases that are popular today, when people come together and buy wholesale parties from the manufacturer, on foreign websites, etc.

CONTROL THE BALANCE OF FUNDS

When paying by a card or via online and mobile banking with the connected information service (SMS or Viber messages), you will always control the balance of funds in your account, which is almost impossible when you grab cash "from the nightstand" while rushing to work. To do this, you can issue a profitable debit card, which is convenient to replenish in any way.

CHOOSE ECONOMY WITH COMFORT

It should be remembered that universal advice does not exist because each person or family is unique and you need to consider your needs and habits in order to feel comfortable. Therefore, after analyzing the information, adjust for yourself an action plan for the wise management of your budget. Do not be discouraged if something went wrong. Having tried different tips, you will develop your comfortable way to spend and accumulate.

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