Saving money is not easy. However, it is a possibility without having to give up all pleasures of life. The first step, no matter how much money you are currently making, is to come up with a strategy and then implement it into your everyday life. Look at all of your expenses--monthly and annually--and come up with a budget and then cut back on spending.
Make sure to track your discretionary spending as well as your fixed spending and create a budget. Also, store your savings in an account where it will grow. Make sure to write out your short-term and long-term goals so you know what you are saving for. Here are some broken down steps on how to go about this process:
1. Examine your expenses
Before anything else, you are going to have to calculate roughly how much money you have spent in the last few months. It might be embarrassing, but it is a necessary step to see where you can cut back. There are different apps that can combine all of your bank statements for you which will make the process much more seamless. You can be more organized in tracking your expenses and coming up with a budgeting plan.
2. Set short-term and long-term goals
Next, it is important to write out what you are saving for in the short-term and what you are saving for in the long-term. The short-term is when you need to save money fast for things such as plane tickets. Short-term savings goals should also always include setting aside money for an emergency fund if you don’t already have one. Long-term savings goals might be saving for a house, paying for college, and eventually retirement.
3. Come up with a budget
Create a budget that sets money spending limits for yourself. The key is to be realistic. If you had been spending $600 dollars on groceries every month, it is not sustainable to cut the budget for groceries to $300 a month. This would require you to change your lifestyle, develop new eating habits, and cooking habits. There are various budgeting methods, however. One popular method is the 50/20/30 method. This breaks your budget into 50% for living, 20% for savings, and 30% for personal spending. This method allows you flexibility when it comes to personal spending. Another popular method is called the 60/20/20 method that breaks your budget into 60% for needs, 20% for fun, and 20% for saving. It makes sure you prioritize what you need over what you want.
4. Store your savings in a place where the money will grow
When storing your savings, make sure to put them into accounts with high interest or returns so your money isn’t sitting still, or worse, losing worth. Some possible options are things like a high-yield savings account that lets you access your savings while also earning interest. Make sure to find an account with an interest rate of 2% or higher so it balances out for inflation. Another option is to store your money in a certificate of deposit (CD). However, hese have fixed maturity rates. So if you put your money into a ten-year CD, you can’t access it until the maturity date without facing penalties and fees. You also can’t add more money to a CD after you’ve put money into it already. One last option is investing in things such as stocks and bonds. This can help you achieve your long-term goals. Remember, however, that investing in stocks is very risky and you could possibly lose a lot of money. Bonds are lower risk, but a lower return. If you choose to invest in stocks, it’s better to do so when younger when you don’t have dependents or more on the line.
5. Switch to a fee-free banking account
This will help you save money because if you overdraft about once a month, you owe a large sum of money to the Consumer and Federal Protection Bureau. It would be better to ditch the bank account with high fees and put your money into an account with no fees.
6. Refinance your student loans
Most Americans hold large sums of money in student debt. Refinancing on your federal and private loans and getting a lower interest rate can potentially help you pay this debt off faster and save money. With refinancing, you are essentially replacing your loans with ones that have lower interest rates.
7. Cut your cable bill
Opt to watch movies and shows on a streaming service instead to save money. If you don’t want to cut your cable bill completely, certain companies can help you negotiate your internet and cable bills down.
8. Cancel your subscriptions
It is far too easy to lose track of products and services you have subscribed to in the past. However, there are apps that can help you track your automated transactions and help you manage and remember to cancel your subscriptions so you don’t have to pay monthly for things you don’t really use.
9. Switch your cell phone provider
Many cell phone providers overcharge you. There is likely a provider out there that will offer you a better deal that suits your lifestyle and wallet in a more effective manner.
10. Seek out lower car insurance rates
Do not settle on what price you pay for car insurance. There are different website and apps that lets you compare insurance plans and thus save money on a monthly expense.
11. Ge a home energy audit done
If your utility bills are killing your budget, look into doing an energy audit. This will help you use your energy more efficiently and save you a lot of money.
12. Unplug machines that eat up energy when not in use
There are many devices that will continue to suck away energy even when you aren’t using them. Appliances such as a coffee maker, phone charger, and cable box can suck up large amounts of energy. This can be avoided by unplugging these machines when not in use or getting power strips where you can plug multiple devices into the strip and just use one outlet.
13. Create shopping lists before going to the grocery store
Plan out your meals before you go shopping and write down what ingredients you need. Cross out items as your shop and stay focused. This can help you avoid buying items you don’t need.
14. Earn cash back
You can save money by taking photos of your receipts. You can search for cash-back items before going to the store through certain apps and then take a picture of the receipt and scan the items’ barcodes. Some apps offer sign-up bonuses as well after you upload your first receipt.
15. Shop seasonally and locally
Buy produce when they are in season in order to save money. Strawberries in the middle of winter are going to be much more expensive than strawberries in their peak season between May and August.
16. Shop at a cost-effective grocery store
Depending on what grocery store you go to, you can potentially be saving or losing a lot of money. Avoid stores such as Whole Foods and consider shopping at places such as Trader Joe's and Costco every month. This can save you a good deal of money. Check out our article on the cheapest grocery stores here.
17. Bring your food places
It is tempting to just buy your food while you are out, but bringing snacks or lunch with save you a lot of money in your monthly food budget. There are lot of great ideas on Instagram for possible easy and tasty meals to take on the go.
18. Try not to eat out or get takeout that often
Treating yourself once in awhile won’t break the bank. However, takeout and delivery fees build up as well as the tips and taxes at restaurants. If you do decide to order delivery, look for possible promotions going on.
19. Implement the 30-day rule when shopping
If you are out and you see a nice dress, ask yourself if you really need it. An easy way of doing this is waiting thirty days before you buy the piece of clothing. This helps to prevent you from buying things on impulse.
20. Do free activities on the weekend
Spending money on the weekends or activities sucks up a lot of money. However, with a little research and planning, there are plenty of free activities to do.
21. Go to the library
Love books? Ditch the bookstore and twenty and thirty dollars books they are selling and go check out your local library. Checking out a book or movie from the library is free...and who doesn’t love free things?
Saving money should not be as daunting as people make it seem. By following some simple steps, you can start to save money right now. If you stay persistent, your hard work and dedication will pay off and you will be able to obtain those short-term and long-term goals.