Most people would say that it's: INCOME - EXPENSE = SAVINGS But actually, the right mindset if you want to really save is to follow this equation: INCOME - SAVINGS = EXPENSE I've been doing the latter most of the time but I believe mine isn't enough because I mainly based my income on my payroll. Normally, my formula would be like this: Income (100%) - Savings (50%) = Expense (50%) But I recently discovered that I'm still saving my money for expenses, so I've changed my model and here's what I've come up that is very effective: Income (100%) - Savings (30% Investments/Business startup + 10% Pure Savings + 10% Charity) = Expense (50% minus Luxury and Vices) So far, I'm doing good with my Financials despite of the expenses. Can you share us your model/Formula?
Great model. I have always adopted Income - Savings = General expenses - (compulsory payments + miscellaneous) = savings from General expenses. I try and save twice one fixed from the main income that goes in bank. Secondly, from the amount allocated for general expenses and allocate it as home savings.
My wife said that I am an extravagant person mainly because of my generosity. But when it comes to shopping, I am quite frugal. And with the savings, I have several places that I use to save money - office drawer, bedroom closet, etc. That is my way of forcing myself to save. Not exactly coins but paper bills that I can afford to save goes to those "saving places" that come Christmas time, I have use for that to augment my budget for the Christmas shopping.
Your formulas are not far fetched from mine. I tend to give a lot of priorities to savings especially now I am yet to have a solid investment on ground. This is the formula I use and have been following: Income - Savings = Expenses In order to ensure a robust savings I am quite prudent when spending on things that are really not basic. I do not always pursue aesthetics.
I usually try to use a hassle free savings formula. I operate from the premise that you should save what you can before to forget. To this end, I usually save any lower denomination coins that I come across and put them in a sort of a piggy bank. Once they accumulate, I convert them into notes and take them into an account. This way, I wouldn't struggle with budgeting for savings at all.
That's a pretty good saving equation you have there @Decentlady. If you don't mind me asking, do you have your own family? It's good to hear from you @Alexandoy. Thank you. Now I know where you are hiding your bills, I may come visit you one day. LOL! That's a very unique way of saving money IMO but then it's cool that you have your own way of forcing yourself to be wise in handling finance. I haven't tried this before but I remembered in the past that I hid some of my bills in books and forget about them. Hmm... I may have to recheck my books now. haha!
Wow! We're similar in this manner. I don't also pursue luxury and I agree I tend to focus more into what I needed the most vs to what I want. With this, I can prioritize easily without sacrificing my budget. I guess this is one of the reasons why I'm still single. Lol! This has been my old school way of saving money. That's a pretty good model but unfortunately, this didn't work out well for me since our Government already have stopped us from saving money on piggy-banks. Also, I get so tempted easily to use the money for my personal wants. This is the main reason why I started my investments. Thanks for sharing your thoughts.
That's a nice model which you have shown here. Well, coming to my personal way of saving money, I follow a very simple model suggested by my grandparents. My grandmother once told me, "Son, if you want to be happy in life, divide your income into 4 parts." The first part for expenses(general day to day needs, bills, gas, household items, education etc).The second part for savings(savings bank account, investment in other sources which provide a considerable rate of interest).The third part for charity(donating to charity, helping people in your family who are in need of money).The final part for enjoying life(traveling, hanging out with friends and family).There is no specific amount or percentage allotted to any of the parts. It all depends on your situation and your income and it varies from time to time. I have been following the above model for a while now and I am happy with the progress I am making so far. Best wishes.
This is a compelling formula as presented as income (100%) - savings (50%) = expense (50%). By practice, this I consider as practically savings formula. Remember we are talking about income (100%) - expenses (50%) = savings (50%). But to oblige oneself to save, you are correct. If a person does, he is one of the millions.
I have a golden rule of saving that my father suggested when I started my career. I saved at least 20% in a recurring account which was paying enough interest to make the amount double in 6 years. I did that every month for 12 years reinvesting and investing almost 30% of my income. Now I have enough to reinvest as my choice and save enough for rest of my life.
I fast once a week. fasting is good for health. Interestingly, one day fasting also saves money for one day food. I avoid meat products in certain days, which also saves me money on food. Food is one of the main causes of expenses. Once you lean how to cut food, you will learn how to save money.
I am currently a student and my main source of income is my allowances. I make sure that I save around 25% of my monthly allowance. The amount of money may fluctuate but I always look for chances to spend less. This is by buying products that are only on offer and skipping meals. I take saving as an obligation to secure my future.
