Often the most difficult thing about saving cash is getting started. It can be tough to decide how you will work to save money, but it doesn’t have to be! Take a look at these 7 money-saving tips to help you create a realistic money-saving plan you can start today.
Chart your expenses
A good place to start is to calculate how much money you spend. Track your expenses, from the coffee you buy on the way to work to the snacks you grab in the afternoon. Once you have all this information, organize it by categories – groceries, gas, entertainment, and so on. Total the amount you spent in each category. If you utilize online banking, you can identify your spending habits and the areas of weakness more easily if you filter your statements.
Make a realistic budget
After you get a good idea of how much money you spend each month, you can organize your expenses into a budget. You want the budget to summarize how your expenses compare to your income. This will allow you to plan your spending ahead of time and eliminate overspending. Factor in other reoccurring expenses, and those that you need to plan for, such as insurance, taxes, homeowner’s association dues and more.
Decide how to save money
Once you have a budget, you can create a savings category. Try to save 10 to 15 percent of your income. If your income level and expenses won’t allow for that, you may need to find places where you can cut spending. Start by identifying non-essentials and spend less money on those things. This includes trips to the movies and other forms of entertainment. Consider inviting friends over instead of going out to eat. If you have anything you can sell, like collections or junk cars for cash, go ahead and do it. Put the money you earn from the sale in your savings account.
Decide what you are saving for
A great way to find motivation to spend less is to set a savings goal. Think of something you want to save money for – it could be a vacation, money for a new car, or a down payment on a new house. Don’t forget that you need an emergency fund too. Determine how long it will take you to reach your savings goal.
Identify which tools will help
Once you know what you are saving for, consider the tools that can help you reach your goals. Savings accounts, CD’s, FDIC-insured individual retirement accounts (IRAs) and stocks or mutual funds are all great options to turn to as you aim to reach short- and long-term goals.
Make saving money automatic
Most banks offer customers automated transfers between checking and savings accounts. You can choose how much money you want transferred and when. You can even have your direct deposit broken up between checking and savings accounts. Opt for automated transfers if you want to save cash since you don’t have to put extra effort into it. It tends to reduce the temptation to mindlessly spend the money in lieu of saving it simply because the money is readily available. Make sure you are utilizing free checking accounts and look for banks that offer sign-up bonuses for opening an account and setting up direct deposit.
Watch your money grow
Make sure you watch your money growing each month. There is nothing like seeing your cash grow! When you monitor your progress, it will help you stick to your savings plan and also identify and eliminate any problems quickly.
It doesn’t matter where you are financially. It’s never too late to turn your financial life around. Take that first step in the right direction so you can get things moving in the right direction.