Given that the average person has under $1,000 in savings and that millions of average working-class people are deep in debt, it’s safe to say that saving money doesn’t come naturally to most people.
Having money on hand for a rainy day is an integral part of having a stable financial life, and of course, if you want to maintain a high standard of living, money becomes even more important.
Here are some excellent and accessible tips that you can incorporate into your life on how to save money fast.
The Importance of a Budget: How to Use Budgeting and Spending Plan to Minimize Unnecessary Expenses and Plan Ahead
One thing many people overlook in the journey to make money fast is controlling spending. Lots of people who are currently wealthy started their journey by minimizing their expenses and investing excess money.
Every dollar saved is akin to a dollar earned, since you will be able to invest it into other ventures, thus allowing your money to work for you instead.
A great way to minimize expenses is to create a detailed budget. Learn how to save money fast by tracking where your money goes every day and write it down.
How do you Create a Detailed Budget?
Create categories for everything (ie. food, travel, leisure, utilities) and observe how much you spend in each category. After a few weeks, you’ll notice that there are some categories where you can easily cut down spending.
For example, you may be spending 15% of your income on leisure or 50% of your income on rent. With this budget log, you can resize categories in order to allocate money where it’s necessary.
Start by decreasing spending on unnecessary categories, and if you need to, increase spending in places where you can afford to spend more, as long as they are essentials.
Being cognizant of where your money is going will allow you to cut down as much excess spending as possible.
After your ideal budget has been drafted, track your spending every month and ensure that you don’t spend more than necessary in each category.
Keep an extra buffer of unspent funds from your income that is to go directly into your savings or investment accounts.
Using this method, you will quickly be able to rack up your savings, potentially to a point where your investments will generate enough money to cover your expenses.
At that point, you can safely relax the budget and increase your spending to a more comfortable level — it takes years of hard work, but in the end, it’s worth it.
How to Create Viable Side Hustles to Boost Your Single Stream of Income
You may already have a day job, but one great way to massively boost your savings is to start a side hustle or a side business.
Since your main income source probably already covers all of your expenses, a side hustle will essentially be pure profit, and you will be able to deploy all of that extra capital into your savings account.
It’s an excellent way to quickly speed up your savings rate, although it does require you to put in a few more work hours every day.
Firstly, find something that you are either very good at or very passionate at (or both!). This can be directly related to your main line of work, or it can be something completely different if you’re in the mood for something new and fresh.
Ideally, your side hustle should be something you run independently (and thus you can attribute as much time and effort to it as you see fit).
If your chosen side hustle is not something that you own (ie. working for an existing business), then ensure that working hours are low and that you can use shifts as per your schedule.
A few examples of side hustles include bartending, freelance proofreading, music tutoring, building computers, furniture refurbishment, online drop shipping, making music, photography, cryptocurrency mining, club bouncing, and more.
Hence, if you want to learn how to save money fast, there’s an endless number of jobs and side hustles that anyone can pick up as long as they have a few extra hours and a skill that most others don’t have.
How to Create Flows of Passive Income That Generate Compounding Returns Without Additional Work
Everyone’s dream is to make money while they sleep. Not only is it a great way to build your savings, but it also requires no additional investment or time.
Such income streams are few and far between, but once you’ve built them, you’re set up for life.
One of the most common passive income streams is the stock market. You can invest in dividend funds that pay out a specified percentage of money every year.
These have an inherent risk since the stock market is volatile, but the overall expected value is positive.
Dividend stocks are popular since they tend to provide a stable and safe form of income.
Another similar alternative is to invest in a broad-based stock market index fund (like VTI) and then cash out a certain percentage of your investment each year (a good figure ranges from 3% to 4%).
A broad-based index isn’t concentrated over a single area of the market and instead represents almost all sectors, so you get a more stable, less volatile, and less risky level of exposure.
This is great if you’re ready to kick back and live off the earnings that your stocks generate instead of using them as a vehicle for speculation.
Since the stock market is expected to return 8% per year on average, over the long run, your money will keep compounding upwards and you will generate a regular stream of passive income (provided there are no unexpected downturns or major black swan events).
What are the Other Passive Income Avenues?
There are a lot of other great passive income avenues that are less common and are of varying risk profiles.
For example, you can mortgage a house and rent it, pocketing the profit made every month (contingent to the rent payment being more than the mortgage payment).
You can also purchase an existing business, hire an operator, and pocket a stream of monthly payments (although this is a more risky option since businesses have several factors that aren’t always foreseeable).
Other examples of lower risk passive income streams include fixed deposits and bond funds. These provide significantly lower returns than things such as business purchases and stock indexes, but they are also much less risky.
The cash flow is predictable (and in most instances, government-insured), so you can use the earnings risk-free and worry-free.
This also makes it easier to create calculations and future projections for your finances, since there is little variance/volatility in these lower-risk vehicles of investment.
How You Can Leverage Debt/Borrowing to Create Faster Income Streams
As noted above, there are a lot of great ways with regards to how to save money fast. However, there’s a major trade-off when it comes to making big money.
A side hustle or a side business, although profitable, requires hours of your day. A passive income stream, although effortless, often requires a very large upfront payment or a lot of risks.
There’s an excellent way to increase the number of initial investments you can make into passive income streams.
The initial investments are very high, so you can use external sources of finance to deploy capital, after which you can enjoy regular passive income streams that will bolster your pool of savings.
This is what most real estate investors do — they take a loan from the bank, use that loan to purchase a house, and then use rent payments to repay the loan (while taking a cut as profit/passive income).
Sometimes, it’s hard to get a loan from the bank for large amounts if your credit isn’t good enough, or if your existing income is too low.
Luckily, places like Credit Hub Capital allow you to take large loans without necessarily having a high credit rating.
You can use these loans to leverage yourself into larger investments — whether it be purchasing an existing business, buying a rental property, or even investing into the stock market.
A personal loan from Credit Hub Capital is all you need to propel your spending power upwards, thus allowing you to make decisions that will speed up your savings rate.
Get a Personal Loan From Credit Hub Today
If you’re looking for a loan for whatever reason — be it a personal loan, a business investment loan, or just a loan to increase your leverage in the stock or real estate market, then Credit Hub Capital is the best place to get one in Singapore.
You can take loans from Credit Hub Capital without posting collateral and without having to pay exorbitant rates of interest.
Take charge of your financial life and allow yourself to grow — do feel free to contact us if you are in need of a loan.