In this article, I’ll explain how and why to manage and save money correctly. Although the subject of money is very important, it is neglected by many people, both employees, and non-employees. In fact, at any level, it’s crucial to get your mind used to save.
In the beginning, even if you earn an average salary, it is important to get into the right mindset (Saving for example 10-20% at a time) because otherwise when you’ll get much higher levels you will have a tendency to squander your money and come back with a zero bank account.
Before you think about how to manage your money you will first need to put some money aside. In the beginning, it is essential to save money especially if you earn little.
This way you would be on the right track with regard to your financial education.
Unfortunately, it will not be enough to guarantee you solid support. Setting aside 20% of your income is certainly a good result, but it is not enough.
The problem when you earn little
Taking the world’s average salary as an example, When you’re making $2,500 a month, putting away $500 at a time, it won’t take even 50 years to put away a sizable amount, especially if you leave it in the bank.
The situation is different in the case in which the American model is followed and therefore in the case in which the money is put into a mutual fund with an average long-term return of 12%, and then after 30 years, over 1.5 million thanks to the compound effect.
However, this is not part of the culture of all nations and therefore we leave it out.
It is important to have a good financial education and you need to get into the mentality of automatically putting something aside.
However, if we talk about small sums (for example 100 dollars), you will never become free from anything, you will very slowly set aside a small sum which, however, will go away very quickly at the first unexpected event.
Obviously, a small nest egg of a few thousand dollars is better than nothing, but you will remain small for life. However, it is still important to do it to get the mind used to it.
What to do at the beginning
To manage and save your money correctly you must, first of all, get your mind used to save, then, after at least three months, you must start investing in yourself to improve your situation. By investing in yourself, for example, I mean buying courses, seminars, books, audiobooks, and so on.
Warning, I’m not saying you necessarily have to spend on information, you can also take advantage of free information reserves. For example, you can read blog articles or watch educational videos on YouTube.
Furthermore, the purchase of a plane/train ticket to reach a free event is also considered an investment.
What is the goal
The goal is to achieve a disproportion between what is earned and what is spent.
The situation to be achieved is the one where you manage to put aside at least 40% of what you earn.
Obviously, at the beginning, you will not be able to do this and you will have to start with maintaining an average of 10-20%.
The latter is a good starting point but it is not sufficient if maintained in the long run. The trajectory must be growing and nothing prevents you from reaching 60-70%.
What I do is put the money I don’t want to spend in accounts that aren’t easily mobilized, where I, therefore, don’t have easy access, and where maybe I don’t have a connected card. The account I use for daily expenses is different from the one where I receive the money.
Why saving is important
The reason it’s important to have savings is because you don’t have the security that you will continue to generate enough money forever and the unexpected happens.
Someone says that money is needed when you are young with the possibility of enjoying life and that when you are old you will not need much money. Anyone who thinks this is wrong.
It is precisely when you are old that you will need economic peace of mind because you will have less energy, little desire to work, and no opportunity to relaunch yourself in case of unexpected events.
The speech is even more important if you want to be an entrepreneur or a freelancer but even an employee must not neglect this aspect because, for example, he may lose his job.
Once you get into the right mindset (here you find my guide on how to reprogram your mind and remove negative paradigms), as we have said, it is important to invest in yourself. For example, if you continue to earn $2,500 a month, know that $500 at a time won’t get you very far.
You must therefore continue to save 150/200 dollars. Not so much for the sum but for the mental habit. The rest, you have to invest in yourself.
The investment is not just monetary
When I speak of investing in yourself, as I have already said, I am not simply speaking of a monetary investment (purchase of a course ticket and perhaps the cost of getting to the location) but also of an investment in terms of time.
Suppose some liquidity comes into it, for example, thanks to an inheritance. In this case, you can use that money to temporarily support yourself so you don’t need to work and take advantage of the extra time to study.
However this is not the only option, for example, another thing you can do is save most of the money received and use the rest on yourself.
For example, if a person earning $2,500 a month gets $70,000. He could save $50,000, which is two years of his lifestyle.
The tips to follow to manage and save your money
The wisest choice is to start studying business, and online marketing, develop your financial education and draw from authoritative sources.
Keep the good habit of saving even small amounts automatically. Invest the rest of the resources that are not part of your spending budget on yourself.
The stages of change
- Start studying the mindset, and how successful people think.
- Realize that you will get nowhere listening to friends and family.
- Accept that you will encounter resistance, negative judgment, and criticism.
- Learn financial education from the best.
- Study business and marketing.
- Take action only when you understand.
If you don’t understand anything about the marketing process, avoid doing something just to not stand still.
Money multiplies by disappearing
Open an account at a bank other than yours that does not have a credit card and if possible not even home banking.
Place a minimum automatic transfer of 10% to this account.
You will start to realize the numbers and you will no doubt waste less money and earn more. This way you create a situation where you save money and increase your income at the same time.
If this does not happen, create a new account dedicated to training putting each month a portion of what was intended into savings.
In any case, do not rush to make a lot of money in a short time, and keep investing to grow your skills. Your income will increase. Now you can spend more and enjoy life.
Be careful not to fall into the trap of spending everything and keep the balance between saving, spending, and money management.
Get out of mediocrity
Now that I’ve taught you everything you need to know to manage and save your money, I want to give you one last but fundamental extra tip
As long as you live in mediocrity you will achieve nothing. You have to leave this condition and feel your progress. Adjust your lifestyle.
At some point you need to savor wealth and prosperity, otherwise, your mindset suffers.
Increase your expenses only when it’s not a problem because you have increased your cash reserves, made investments, and created the conditions for new income.
It is not sustainable to go on without rewards. At some point, it ends up exploding.
This is why it is right to improve the lifestyle. This also means giving yourself permission to access top-notch content and training.
Spending money is part of a process of growing and understanding. You’ll never understand how rich people think and how to charge you a lot if you’ve never tried spending.
You cannot expect to create abundance by living in scarcity. Have you ever heard of empowering environment? Start savoring a new lifestyle.