Who would not love to save money? Well, I love that idea. Whether it is putting off a family vacation or denying yourself an order of caramel macchiato once a week, we have our own ways to save.
I admit it; I feel a little guilty before when the topic is about saving money. I always have good intentions in terms of saving money, but unexpected things strike. My house needs a roof; the car needs maintenance, the monthly bill increased – just like that, I put saving money off.
How many times do I tell myself I will find ways to save money? Well, it’s countless.
However, no matter how hard it is to save money, I need to do it for future needs. Many would relate that the hardest thing about saving money is how to get started.
When I made saving money a priority, let my needs be more important than my wants, and developed a healthy spending of money, I find no problem with my budget or managing my finances.
I understand how sincere you are to save money but end up with the opposite results. Some things might not favor our plans, so we need to set aside, saving money for a while. Believe me; I’ve been there. That is why I give you the following tips for how to save money:
- Record Your Spending
Do you spend $25 a week for snacks at your office? That is more than a $1,000 budget annual budget for soda and snacks.
The first thing I made when I started saving money is determining my expenses. I keep track of all my spending, from coffee to household items.
After gathering your data, you can then start categorizing the numbers by mortgage, groceries, and gas. Next is to sum up each amount. To ensure everything is accurate and you did not forget any, you can use your bank and credit card statements.
The importance of keeping track of the day-to-day spending is you will not live beyond your means. Use your bank statement to know the amount of money that goes into your account, as well as how much goes out. After that, you can start comparing it with your budget. That way, you can figure out whether or not you are sticking to it, and which areas you can save.
- Make A Workable Budget
A budget will be the heart of your savings. It will help you prioritize your spending while maintaining a balance between expenditure and savings.
Once you have an idea about your monthly spending, start making a workable budget. Make sure to outline how your recorded expenditure measures up to your income. By doing so, it also limits overspending. You can include expenses that occur regularly, like car maintenance.
Check your receipts, bank statements, bills, and credit card statement to work out all your regular expenses. These include electricity, insurance, transport, and home loan or rent. After that, you can then deduct these expenses from your income.
I recommend making some updates on your budget at least once a year. In case some circumstances change significantly, let’s say you are having a baby or getting a new job, you can update it frequently.
- Set Savings Goals
Another way to save money is by setting a goal. You can start by thinking of what you want to save for, such as you are saving for retirement, planning an overseas vacation, getting married, or having a baby. Once you know the reason why you want to save money, you can then proceed to determine how much money you will need as well as how long it may take to save that amount.
Below are some examples of short-term goals (1-3 years):
- Down payment for a car
- Family vacation
- Emergency fund, 3-10 months of living expenses
For long-term goals (4 years or more), consider the following examples:
- Retirement
- Child’s education
- Down payment for a remodeling project or a new home
Do you want to save for your child’s education or retirement? I suggest putting your money into an investment account like a 529 plan or IRA. These investments may come with risks, but they create a great opportunity for growth when the market is growing.
Based on my experience, achieving smaller goals gives a psychological boost. It will make you feel that all your efforts to save money are paying off. You can set small short-term goals for something fun and are big enough, such as holiday gifts or a new gadget.
- Know Your Priorities
After your incomes and expenses, your goals will hugely impact how you are going to allocate your savings. Make sure that your long-term goals will not take a back seat to your short-term goals.
Furthermore, you need to prioritize your savings goals. That is to ensure that you have a big picture of where you will start saving. For instance, if you think you will need to renovate your home in the future, then it’s a nice idea to start putting money now.
- Open a Savings Account
Compared to a basic transaction account, a savings account offers a higher interest rate. Through this account, you can put some or all of the amount of money left after paying your personal necessities, tax, and other windfalls.
In order for you to prevent getting tempted to spend this discretionary money, you can set up an automatic, scheduled transfer from the transaction account to a savings account. If you want to collect extra money from the savings account, rounding down the transaction balance will help.
For example, if my account had $211.85, I would round it down to $200 and transfer the $11.85 to my savings account. Without putting so much effort, these small amounts resulted in a few hundred paid off.
- Pay Off Your Credit Card
High credit card rates can easily undermine your money-saving goals. That’s one of the things I have realized while contemplating the reasons why it’s hard for me to save money. If you pay your credit card on time and in full, you can prevent late payment fees as well as interest charges.
By setting up a direct debit payment, it’s a lot easier for you to prevent missing any repayments. It is also recommended to than the minimum required to avoid paying high-interest rates.
Additionally, you can look for a credit card that comes with cash-back rewards programs. This means that you can redeem these rewards every few months, where you can put that amount of money into your savings account.
- Focus on Recurring Expenses
Little did you know that your recurring expenditures provide the strongest ground to boost your savings? Take a look at your bank statements and search for all the things you have spent money on for the past year. After that, try to see how much money you can save from them.
You can cut the fuel costs by choosing service stations that offer the lowest prices, or you can go for a cheaper energy retailer to cut the monthly energy bill by almost half. While you are already satisfied with the internet service you currently have, asking for a cheaper plan also helps your saving goals.
- Consider Bill Smoothing
With bill smoothing, you can pay your utilities such as electricity, water, and gas monthly or even fortnightly rather than paying the entire bill once. This payment system will protect you against bill shock, especially if you are on a tight budget. Besides, you can avoid potential debt and paying interest.
Over time, you can save money from paying certain bills. You can calculate how much your utility bills cost for the year to plan how much money you will need for each in advance. Once you set aside this amount every time you are paid, you can get money available to cover the next bill.
- Practice Self-Control
I love online shopping and using my ATMs and credit cards. However, these things easily reap off my extra money, and I even touch my budget. Spending on things I want instead of what I need really put off my plans to save money.
Make sure to control your impulses on spending things more than you can earn. When you consider the things you should prioritize, you can improve your financial decisions. If you find something you want, wait at least a single day before buying it or make an excuse for yourself why you cannot buy that on that day. By doing so, your urge to buy it will as pass.
- Plan Your Meals
Creating a meal plan is an effective way to save money. You can start by determining what you are eating for a whole week and shop accordingly. This will help you avoid random or unnecessary visits to the supermarket. If you often visit the supermarket randomly, you will end up spending more money and left some food items unused.
If you spend about $3,4600 on food outside per year, then that would be $288 each month. Other than having a meal plan, you can pack a lunch. By just preparing your lunch a home, you will be surprised how much money you saved after a month.
Conclusion
Are you ready to start saving? Are you excited to reach your money goals? If so, then you need to start working on that now. Besides, make sure that you will have not only short goals but also long-term ones.
I hope that the above tips for how to save money above will help you a lot in your financial journey. Happy saving!
