10 Best Ways to Help You Save Money
Saving money is an age-old preaching and is considered to be one of the crucial pillars in financially establishing oneself. Although it’s obvious that you need to have some saving to tide you over various financial circumstances, many people still find it hard to sock some dollars away.
In fact, studies show that more and more Americans have little to zero savings. According to CNBC, Bankrate’s survey found that out of the 34 households surveyed, only 39% were able to meet an unexpected expense of $1,000. What’s even more startling is that many people resort to debt instead of using an emergency fund they should have established in the first place.
Additionally, Bankrate also found that approximately 65% of Americans don’t have or only have little savings, and these people are likely to struggle in their retirement years. According to Bankrate’s economic analyst Mark Hamrick, “With a steady, significant share of the working population saving nothing or relatively little, it’s virtually guaranteed that they’ll be unable to afford a modest emergency expense or finance retirement.”
Importance of Saving Money
The famous quote, “save money and money will save you,” now rings true for most of us. Saving money is important for the main reasons:
Deal with emergencies
Whether there’s a sudden need for roof repairs or need to spend out-of-the-pocket for medication, you want to have some dollars stashed away for emergencies. It is recommend saving at least three months’ worth of monthly income so you can have enough leeway to re-establish yourself financially while dealing with the emergency.
Pay for some luxuries
If you want a nicer car or upgrade your home, go on vacation or spend for a lavish anniversary celebration, having some savings give you the foundation to enjoying some of life’s luxuries without going into debt.
Save for retirement
You cannot depend on social security alone when you’re old. Saving for retirement allows you to build a decent nest egg so you can live a comfortable life in your golden years.
Save for education
The cost of college is increasing year after year. Most students are able to graduate with the help of student loans and part-time jobs, but you can help your kids early by putting up a college savings fund for them while they’re young.
Enjoy more freedom
When you’re debt-strapped or live a paycheck to paycheck lifestyle, your options are limited. However, when you’re able to save, and then invest some money, you gain more choices in life. You can quit a job you hate, put up your own business or jet-set around the world simply because you know you have some savings to fall back on.
10 Smart Steps to Saving Money
Create a budget
One of the cornerstones to any financial success is creating a budget. A budget is a tool that allows you to direct where and how money is distributed. If you’re unable to save now or keep failing to save, the first area that you should look at is your budget. If it’s non-existent, it’s probably not working for you.
A budget doesn’t have to be perfect right away. Experiment on a budget based on your financial circumstances and goals. Some people like to follow a certain percentage like the 50-20-30 budget. With this method, you allocate 50% of your income to your needs, 20% to your savings and 30% to your luxuries. You can always tweak these numbers until you achieve the right combination.
Or, you could go old school and use the envelope budgeting system. With this method, you simply need to identify your spending categories and place the appropriate amount inside the envelope. Whenever you need to spend on something, you just need to pull out cash from the right envelope.
And then there are digital budgeting apps. These are applications that you can download to your computer and smartphone. Most of these apps allow you to link with your bank account so that whenever you spend, the data is updated real-time.
You certainly have a lot of budgeting options, but whichever method you pick, it is important that it works for you based on your financial realities and you stick to it no matter what. Also, don’t forget to set “saving” as a top spending category so you never fail to save even before you disperse out your income to other expenses.
Set up a savings account
If you pool all your money in one checking or payroll account, chances are your finances could easily get messed up. Setting up an account meant particularly for savings can help you organize your finances and also motivate to save even more.
A regular savings account or CD account is an excellent option if you’re looking to save for something short-term. If you’re saving long-term, say for retirement, it’s best to place your funds in tax-advantaged accounts like an IRA.
Give your savings account a name, whether it’s for emergencies, annual vacation, wedding, or college. This gives you the mental boost to increase your savings and discourage you from unnecessarily taking money away from it.
Set aside money every month
It’s also a great idea to save money every month. In fact, personal finance experts preach that we should keep saving off a portion of our income, no matter how small the income is.
If you find it challenging to sock away savings every month, consider automating it. Talk to your bank about automatically transferring a certain amount from your checking or payroll account and transfer such amount to your savings account. The money would be saved before you even had the chance to spend it.
There are also a couple of things you can do to increase your monthly savings. Consider putting away your spare change to a jar and deposit the money into your savings account every month. Also, it would be great if you could decrease some aspects of your spending, like lowering your utility bill and cutting off cable, then throw the said amount to your savings account. De-clutter and sell your pre-loved goods and place the proceeds of the sale towards your savings account. It would be great if you can identify an area to cut back expenses on each month so you can further bring your savings up.
Pay off your debts
How are you saving when you’re paying off debts? Debts are notorious in hindering you from achieving financial progress. Instead of using your income to pay for your basic needs and some wants, you instead need to use some of it to cover your debts.
Tackling your debts unload you of the interest payments and late fees, among other things. High-interest debts like credit cards eat a huge portion of your money just by paying interest alone. But if you aim to pay off your bill in full every month, the interest no longer becomes an issue.
Additionally, if you can settle your debts, like medical bills and consumer loans as soon as you can, you also free up a good portion of your income and have some extra money to grow your savings.
Cook your meals at home
Eating out can be a fancy experience, but if you do it too often, there also goes a good portion of your food budget. If you want to save a couple more dollars, consider cooking your own meals.
Cooking food at home is a great money saver in several aspects. First, you get to control the ingredients. You can find a cheaper yet healthier alternative for almost anything if you do your own food shopping. You can replace meat with tofu and opt for on-season fresh produce.
Also, you can brown bag your lunch to work or school. These meals don’t even have to be made from scratch every time. If you’re creative enough, you can turn last night’s turkey into today’s sandwich for lunch. If you come to think of it, you only needed to spend for one meal yet consume it for two or three more meals.
You can also cook food in huge batches. This is a perfect way to save money on ingredients, power and even the time you need to prepare and cook meals. Simply freeze the food into small individual meals and microwave it when you need to it.
Finally, meal planning can put things in perspective. Instead of wondering what to cook and easily get tempted to order takeout or eat at a fast food, following a menu gives you more control and discipline over these temptations. Also, it allows you to fully utilize the ingredients you have available and reduce the risk of them expiring or spoiling in your pantry (which is such a waste of money).
Take up couponing
Ever heard about purchasing items with discounts upon discounts? With couponing, you don’t have to pay for the product for its full price.
If you can spare some time clipping and organizing physical coupons, or downloading coupons from the internet, then you have the potential to save a few dollars when you go shopping. Coupons may be used on the product itself, the brand or at a specific store. And if you time your shopping right, you can stack coupons with existing promotions and discounts so you can save even more money at the checkout counter.
Couponing is also advantageous if you want to buy in bulk and at a discount. You can stock up on non-perishables like personal care products, household items, and canned goods if you use several coupons and match them up with existing discounts.
Plan out your spending
Having a budget is a good thing, but having a spending plan is another good thing to have in your arsenal. Planning out your spending entails a more detailed inspection of how you wish to spend your money on a certain event or occasion.
For instance, if you’re planning a celebration for your kid’s birthday, you need to know how many guests you expect, what food you want to serve and determine all the spending areas. You can then set a budget for things like loot bags, decors, and food etc.
Planning out your spending is a great way to keep your finances under wraps and prevent you from spending. If you’re looking to spend the holidays in another destination, you could start looking at cheap airline tickets. If you wait a little longer or purchase near your departure date, those tickets would cost you more. Pick an accommodation that fits your needs and lifestyle and research on places that you might enjoy without breaking the bank.
Suffice to say, having a plan for almost anything put you at a great advantage. You can spot areas to save on and steer you away from overspending.
Refinance long-term loans (if possible)
You might not have considered it before, but you can save some money if you opt to refinance long-term loans, such as student loans and mortgage.
Refinancing works by taking on a new interest rate or loan term with a new lender. You allow the new lender to cover the old mortgage and give a new loan rate and term which may be lower and more manageable than your previous one.
Of course, you want to approach refinancing with caution because the circumstances are never the same for everyone. Also, there are costs involved in refinancing. Do the math, run the numbers and figure out the best digits that you can live with before you approach a lender.
Set savings goals
Goals are your mental motivation to achieving and succeeding at anything. When it comes to saving, setting your savings goals give more meaning to your efforts. You are saving, yes, but what for? Is it for your upcoming wedding, for your holidays next year, for your child’s college in three years, or for your retirement? When you have goals, you become more empowered to save.
Take it a notch further by putting your goals in writing. Think of it as a daily reminder of why you’re being financially-conscious. It’s even better if you track your progress and celebrate the small wins.
Every now and then, re-visit those goals and determine whether these are still the same goals you want to achieve of if you’re changing goals due to some life circumstances. Whatever the case may be, consider looking at your goals from time to time.
Stay the course
If you’ve been doing pretty well with your savings progress, then well done and give yourself a pat at the back. If you’ve been faltering and making progress, don’t lose heart. We all go through a period when we stray from our goals. What’s important is you realize that you’ve lost track and you now want to put yourself back in the right direction.
Saving money comes with some roadblocks and challenges. You may forget that you’re saving for something when a fancy, glittery jewelry caught your eye and made an impulse buy. Think of such things as experiences you can learn from. If you’re dead set saving for an important thing, put your focus to it and don’t place yourself in situations where you may get tempted to spend. Remember, you’re saying “no” to something right now because you’ve said “yes” to something that’s even better.
Saving money is easier said than done. What’s even tougher is keeping that money saved. But think of saving as fundamentally the first way to establish yourself financially. If you want to act like a financially independent adult, saving money is the first way to do it. Your own savings will become your cushion in case of emergencies, and it will also finance your own needs and wants. Nothing beats affording something out from your own savings, care of your own hard work and wise financial handling.