What would you do with extra money every month? What would it be like to have money set aside for your next round of car trouble or to buy Christmas presents? They say that money can’t buy happiness but having some set aside for emergencies and planned expenses can certainly reduce stress and free up your finances when you need them most.
Building up a healthy savings account sounds simple. Spend less than you earn. It sounds easy enough, but the reality is that our lifestyle tends to grow right up to the size of our paycheck. That’s why money saving tips can be so important. To change your bank accounts, you must change your thinking.
Finding extra money at the end of every pay cycle is not likely. If it’s there, it’s going to be spent. That’s why it is important to set yourself up for success rather than failure. If you stop thinking of saving money as restrictive and instead consider money saving tips a way of life, you’ll soon find your savings account growing, your stress level reducing and your overall financial position much healthier.
The key to money management is developing good habits, and the following provide a basis to help you save money by doing just that.
The Fundamental Money Saving Tips
To save money, you must know where you are spending money. Before you can save money, you must first set up your overall financial life for success. These are the fundamental money saving tips that apply for all income levels.
Track Your Spending
Do you know how much you’re spending every month? You might be surprised to see how much you spend on entertainment versus rent. Or how much your cable bill eats into your overall monthly spending money. Your first step is to simply become aware of what you’re spending.
Tracking your spending helps to monitor, and create budgets, so you’re not only able to save, but live within your means.
Establish a Budget
Unless you’re looking to move, you probably can’t change much about your biggest expenses like your rent or mortgage and car payments. But you can control other types of spending like entertainment, meals and new clothing. Give yourself a reasonable amount to spend every month and then stick to that limit. While certain expenses that are essentials are not usually all that negotiable in cost, there are certain luxuries which are, and these can help you fine tune overall expenses.
If you don’t see money, you can’t spend money. After you have tracked your spending and established reasonable amounts to spend every month, set up an automatic deposit or transfer for what’s left. This is your new monthly savings – even if it’s only $50 per paycheck – and you want it to move before you even notice it. To best use this money saving tip, look at splitting your direct deposit or establishing a transfer to a savings account separate than the one you use for spending.
Money Saving Tips and Financial Goals
Now that you have tidied up your financial house and found a bit of extra cash to start saving, it’s important to find the right money saving tips to put you on a pathway to meet your own goals.
Build an Emergency Fund
Your first goal should be to build a basic emergency fund. This should be an account that has $1000-$2000 of money that is easily accessible should an emergency occur. Car breaks down? You have cash on hand. Need to pay for the doctor? Your money is right there. If you spend part of your emergency fund, immediately refill it so that you always have it for peace of mind.
Use Retirement Savings
If your employer offers a 401k or other type of retirement account, use it. This is especially true if your employer offers a company match on retirement savings. Retirement saving is necessary, and the younger you are when you start, the more your money will grow. Save at least as much as your company will match and leave it alone. Once you have set up your automated retirement savings, it will grow without much assistance from you.
If you have other financial goals like a vacation, special purchase or Christmas shopping, save cash to get you there. You can stash a $20 every week into an envelope labeled with the goal or drop your spare change in a jar. Some families will even buy a gift card every week toward a goal like a family vacation. Over time those gift cards will add up. Just be sure they can be consolidated and the cards don’t expire.
Build in Wait Time
Sometimes just waiting will allow an impulse to pass. If you know that you spend money on impulse, simply build in wait time. This money saving tip doesn’t tell you not to buy something, it just says you must wait 48 hours to buy something. If you still desperately want it in two days, it’s up to you to buy it. If it was a frivolous impulse, the urge to spend might well have passed you by.
Money Saving Tips to Save More
You’re making progress toward your savings goals, but maybe you want to move faster and save even more. Saving larger amounts of money often takes time, but there are ways you can speed up the process using smart money saving tips.
If you want to save more, perhaps you need to earn more to reach your goals faster. A side gig, over time work, working a second job on weekends or some other type of additional employment may be what you need to reach your goals more quickly. Work a second job, and stash the entire paycheck toward future goals, especially if you don’t have much left over in your steady paycheck after you pay your bills every month.
Save the Windfalls
It’s very hard to not treat yourself when you get a windfall of cash. Your tax return comes in or you get a bonus at work and suddenly you have a lump sum that you can use on bigger purchases. If you can’t bring yourself to put the entire windfall into savings, one money saving tip would be to simply save half of it. Money comes in, send half immediately to savings and enjoy the rest.
Save Your Raise
When you get a raise or a bump in pay, immediately adjust your automatic savings. If you have a workable budget, sending that extra money into savings won’t even hurt. Your lifestyle will continue unchanged, but your savings will start to grow by leaps and bounds.