Source: Savebly 1. Calculate the price of things in terms of time

My first advice may sound a bit odd - and I assure you it may sound weird if you try to explain it to other people - but it is extremely useful: Before buying something, think about how much it costs in terms of the hours you need to work to pay for it . In combination with this, think about how much your cost per use is: that is, the total cost divided by the times you will use it. For example, if a pair of jeans costs $ 90, and your hourly wage is $ 10, you need to work ten hours to buy it. In addition to that, if the pair of jeans is of good quality, and you can use it many times, it is different from whether it will fall apart in a few uses or if it will go out of style and you will not wear it anymore:A $ 90 garment that you will use twice ($ 45 for each use) is not the same as one that you will wear every day for six months.

This is a habit that, once adopted, will help you make smarter decisions , such as stop buying things that you will never use, and start buying less things, of better quality , that will last you longer and will be a better investment.

2. Identify and eliminate unnecessary expenses

This obviously depends on each person, but, for example, many people consume all their entertainment content over the Internet: those people could easily get rid of a cable television bill . Likewise, if you eat it very often, or if you buy a coffee every morning, it may be good for you to calculate how much you would save if you changed your habits a little , and then determine if you are willing to do so. This is linked to the third tip:

3. Keep an expense diary

For at least a couple of months, write down everything you spend, detailing not only the amount but the concept, the date, and even the time: this will help you find patterns in your consumption habits , and determine, for example, if you spend more on a certain day or at a certain time, or if you are spending too much on a category you shouldn't. There are financial applications that can be very useful if you prefer to do it in digital, and they also have the advantage that they help you analyze - with graphs and others - these patterns and habits in your way of spending money, as well as to proportionally visualize what they are your higher expenses and also how they relate to your income.

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4. Set a budget

Yes, I know that having a budget sounds like the last step before becoming your parents . But the reality is that a budget, even if it is a general one and with certain freedoms, is the only way to keep track of all your income and expenses and to ensure that you never run out of money to pay bills . And believe me, the peace of mind of knowing that you are not going to spare a month at the end of the fortnight is worth the extra effort.

The peace of mind of knowing that you are not going to spare a month at the end of the fortnight is worth the extra effort.

There are applications to keep budgets , or you can do it in a spreadsheet on your computer, or simply on a piece of paper. To create a budget, it is very useful to have started by keeping an expense journal for one or two months. Once this is done, you have already identified what your expenses really are, and you are able to prioritize them and estimate approximate amounts for them. Starting with the payments you cannot avoid (such as rent, insurance, mortgage, debt payments), set categories and set limits for each one.. Very important: do not forget to include an amount for entertainment or leisure (because if you make it too strict, your willpower will end and you will not be able to maintain it) and an amount for emergencies. But the most important thing when creating your budget, is the last tip:

5. Create the habit of saving

Saving can be extremely difficult when we are not in control of our finances, and it usually happens that we are inconsistent or that we end up spending money at the first opportunity. It is useful to set a goal , think about what you will do with the money once you have reached it: for example, save for a trip you have always wanted to do. Once you have the habit , it is easier to continue doing it even without the goal .

Be that as it may, it is very important to always have an "emergency fund" : some money to help you recover from a financial or emergency hit, such as when an appliance is damaged, a pipe is broken, or you suffer from illness. Ideally, have at least the equivalent of three months of your budget in a savings account: this should be your first goal.

The percentage that is usually recommended to save is 20% of your monthly income , but this is hardly a guide: it depends on your income, your ability and your goals to determine what percentage suits you. The important thing is that once you have made these decisions, your relationship with your money will be clearer and will allow you to have a greater sense of control over your life .