How to save money?

Welcome to us.
This is all you need to know about saving.

Did you know that according to a recent study by a famous bank: 47% of US households have no savings, and another study published in a leading magazine found that 69% Americans do not have more than $1,000 in their account. This means that every two people you meet, there is one person without any money and every 3 people you meet, 2 do not have even $1000.

To answer the question “how to save money?” we will go step by step and we will take a look at the big picture first:

I- First of all we should know the basic concept of things like income, consumption and saving.

Income is money that is earned in many popular ways such as salaries, bonuses, profits from investment, rental property, etc. Income is the basis, the hinges for spending. High or low income shows the financial strength, the higher the income, the greater the financial strength and vice versa.

Consumption or expenditure is the payment for the various needs of ourselves and our family, such as food, drinks, travel, entertainment, travel, rent, shopping health care, etc. Expenditure is closely related to living standards. Usually the higher the expenditure, the higher the living standard, and vice versa.

Savings are the amount left after taking the income minus spending. Therefore one of the best money saving method is to increase your income. If you want to save more with the same amount of income, your priority should be to reduce your current spending. There is usually a contradiction between spending and saving: the higher the living standards now, the lower the future stability, which also lowers the opportunities to increase income in the future (which indirectly improves living standards in the future) and vice versa.

Savings are generally intended for 3 purposes: to increase future incomes, to consume or to prepare for future consumption (savings to buy a car, travel, and especially to prevent risks such as job loss, sickness, etc.) and in some aspect, it is among the factors contributing to financial and psychological stability.
Generally, saving more means more opportunities and reducing uncertainty in the future.

II. The excessive focus on the concepts will make things very lengthy, here we go into the ways of spending in decreasing popularity order.

-1: Spending before savings, trying to estimate a reasonable amount of spending by day or week … in the beginning of the month. At the end of the month the amount left is consider saving. This is the most common way in society, and it often appears ineffective in saving.

-2: “Don’t need to think about money. Any deficits can be covered by loans” method: Work according to capacity and spend according to needs. Live luxuriously at the beginning of the month and eat bread at the end. Borrowing makes things out of control. However, the hustle way of life appears in many households and especially single individuals. With its being the second most popular method, surely we will not have savings with this method.

-3: Saves up to a certain amount of money for stockpiling and then spend all of money left. For example, someone saves $11,000 because it is the money needed at this time for incidents to occur and all future income will be gone to the last penny. The standard of living is premium, no worries about illness or illness, but it will be a problem if there is only $11,000 saving in life.

-4: Expenditure by total assets: This usually occurs in the rich, taking a fraction of a small portion to spend for years.

-5: Saving before spending: When there is income such as salaries or bonus, we set aside a certain amount that we consider reasonable, then consume within the rest. This is less common but the “efficiency” in savings is quite high.

-6: Trying to list all needs from now until “very long” later and try to balance everything. Just assume that it includes everything, from monthly spending for food, electricity, water, etc. until the end of the year: changing TV; next year: having to buy a car, in 3 years’ time: buying a house, etc. In order to do so, in 5 years’ time, income has to double and saving has to triple. This method is less common than the above. The side effects are headaches and psychological pressure because needs usually exceed income.

-7: “Saving to the end”: This method is by all means reducing consumption, so that next month spend less than last month, tightening the belly. The side effect is very low living standards. The advantage is very high savings, great financial stability.

-8: The method of spending according to past income. Examples can be spending based on the income this month a year ago. The advantage is to reduce the fluctuations in consumption, softening the consumption, avoid abruptness. The percentage of this method usage is low but higher among those who have unstable, inconstant income.

-9: The 9th most common method is to copy the spending of a relative or a friend, namely, the most common is one’s parents. The advantage is not having to think much, the downside is that it seems that each person has different needs, different income .

-10: Expert advice. Find one or several people, give them numbers or answer the questions they want. Then they will advise you on how to spend. The level of the expertise will influence the quality of the counseling and each time you change income or needs, you will need a new consultant.

III- To answer the question “how to save money?” We will study a prominent feature of the object of consumption:

Often, spending is understood as buying something. This often has many characteristics among which one characteristic that closely relates to the problem in question is the loss of value.

The loss of value is a basic concept that can be understood as over time, the value of what we possess decreases (in large part, it can be interpreted as depreciation).
The higher the loss of value over time, the worse the consumption object.
For example, when you buy a $1,000 television, after two years, you sell it at $600, so we lose $200 a year. Comparing this with a three-day trip of $1000, you will find that after the trip, you lose $1000. Travel is very expensive compared to buying a television in this example.

Normally in consumption, people try to choose low value loss objects to satisfy more needs at low cost.

IV- Some Tips to Increase Your Savings Effectively:

1- Set big, long-term goals. If you set yourself on big goals like becoming a millionaire, buying a big house or being financially free from working at some age … then you will tend to disregard your current needs and thereby reduce spending. We will sometimes have to take a step back to see the big picture, to take more steps later. This is an effective way to help us save.

2- The key of spending too much is our psychology. A study by psychologists shows that spending money makes the brain feel satisfied like addictive substances.
If you are broke or worse, using a credit card regularly, you need to self-treat using the following methods:
Frequent reading stories or listen other people’s miseries, the misfortunes of others will help to lower the level of satisfaction when spending money. If you look at the photo of the underprivileged children in Africa who have not had food in their stomach for a week, then you will probably spend less money that day. If you read the articles on a poor mother who has struggled with cancer and raised children, news of the earthquake and the scene of the plane crash … all of that, if you “inject” into yourself at least once a day like taking a pill, it will help you reduce your “illness”.

3- The third effective way we mention here is that you find a job or hobby to do, which does not cost money.
Try to find a field that you are passionate about and it does not cost money. The day you find it is the day after which you will be able to reduce your spending.

4. It is equally effective that before each consumption decision you should have your considerations and comparisons between the goods and the other goods of the same type, different type, same class and different class, etc. the more you measure between the more items, the healthier your spending gets over time. If you want to buy a new washing machine, consider three of one brand and consider four brands together, the thorough investigation will make you buy what you need, with just enough functionality instead of buying one. you never run half of the functions.

5- If all of the above appear to be ineffective then you fall into the group that needs heavier method: leave all the cards at home and go out when there is only little cash in the bag. It’s hard to spend $120 when you only have $100 in cash and no cards.

V- Saving formula for you:

To answer the question “How to save money” more clearly with each level of your income in each country, we will give you a savings suggestion that suits most people.
For example, your income is $30000/year and your average national per capita income is $40000/year, with this formula, it will show that you need to save: $3235/year.

Enter your earnings/ year:

Enter your national per capita income/ year:


© how to save money. All rights reserved.

iq test