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5 Tips to Save Money

I moved to Canada as a young woman. I worked long hours at 2 jobs and was earning more money than I had ever earned in my life and started feeling rich. I sent my brothers and sisters to good schools and let them buy things that I never had growing up. I even bought myself a second hand Volvo -- my first automobile.

After a few years of doing all of this, I saw that my bank account wasn’t growing. I was making more money than ever but my bank account was still empty. This was when I learned that I had to better manage my personal finances. Over the years I use these 4 tips to help take me to where I am today investing money rather than spending it.

1. Save 20% of Your Income

Even if you aren’t making money yet and you are still being supported by your parents or someone else. You need to make the most of the money you receive. There will come times when you are unemployed can’t work. It is during times like this that savings are so important.

The rule I use is to save 20% of my income before taxes and monthly expenses. However, this is not always practical especially if you are new to the workforce and your income is very small. I advise you to start with 5% of your income and then increase it to 20% over a couple of years. Just keep in mind the more you save the safer you are in case of an emergency and the better able you are to become wealthy.

2. Spend Wisely

I remember when I was working as a maid in Singapore and I started getting a better wage. I sometimes used my one day off per month to go shopping or eating out. I would go to Starbucks or McDonalds, or buy new clothes. I later realized that I was spending a lot of my monthly income and had nothing to show for it.

This led to my mantra of “Do I need it or do I want it?” Whenever I think about spending money, I always ask myself this question. I don’t need to overspend at Starbucks when I can make a good cup of coffee at home. My own cooking is cheaper than McDonald's (and more healthy). Do I really need another blouse and can I buy it when it's on sale or even better, borrow one from my sister?

3. Take Care of Your Health

Eating healthy food like fruits, vegetables, nuts and fish costs less than eating unhealthy foods like white bread, meats and processed with a lot of sugar and fat. Reduce the amount of junk food you eat and restaurant meals. It costs less to eat healthy but it also reduces the chance of you getting seriously ill and having to go to the hospital can cost a fortune. On top of this, the increase in nutrients for your body will help your brain function better so you can achieve success.

4. The Value of Saying No

Just like many people from poor families who go to work abroad, I used to send all of my earnings to support my huge family. Although I was completely broke all the time, I felt good about my sacrifices since I was making a difference in the lives of my brothers and sisters, nieces and nephews, and many others who asked for money.

However, over time I noticed that none of them developed their own careers or opportunities. Too often my money would be lost to gambling or drinking and it was not fair. With great difficulty and a lot of tears, I slowly reduced the amount of money I sent and allowed my family members the opportunity to develop their own abilities. It was one of the hardest things I ever did in my life but the result was the best. My family members figured out how to make and save their own income and look after their own families. Today, they are happy and are proud of themselves and their achievements. My free money was actually holding them back. Free money is fine in the short-run but destroys people in the long-run.

5. Buy Real Estate

Buying your own home is one of the best investments you can make. To do it, you need to first save enough to make a good down payment. It can be a condo or a house but make sure it is close to your work. Also try to buy in a good location that will increase in value over time. Buy a house that you can afford the payments comfortably. Don’t buy a house that you can barely afford or you risk losing it if you lose your job or have some other financial emergency.

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