By Ann Sullivan
If you’re among the many who live paycheck to paycheck and struggle to make ends meet, you probably have a hard time saving money. If the thought of saving seems impossible, there are ways to get started that will not be so overwhelming. The point is, however, to get started! After all, having a cushion tucked away will give you peace of mind and security. It will also be necessary when you approach retirement age. It’s important to start now and don’t procrastinate. Here are nine ways that can help you get thinking along the right track to start saving money now!
1) Track Your Spending
The first step to saving money is knowing how much you spend weekly and monthly. Start where you are right now and make a list of your expenses. Begin with things that recur monthly, like rent or mortgage, insurance, phone, utilities, etc. Those are generally fixed amounts that fluctuate less frequently than other expenses. From there, look at what you spend on groceries, gas, and other necessities that may not be consistently the same amount. Take the average over a month’s time and put that on your list. From there, look at what your flexible spending purchase are. That’s those purchases that don’t happen with any certain regularity. It also includes impulse or splurge items. That will also give you an idea of where you can cut down or eliminate the expense and save the money instead.
2) Make a Budget
Once you have a list of your expenses, it will be much easier to create a budget. Take your total monthly income and deduct your fixed expenses. From there, take what you have left and allocate funds for necessities like gas and food. You can determine this amount by averaging what you spend and leave a little wiggle room for that possible fluctuation. It may take some months to get it down to a science, but keep working at it. This is especially true if you’re not a planner and not in the habit of budgeting. Also, cut yourself some slack if you slip up and spend on something you probably didn’t need. It’s okay to treat yourself occasionally – a reward for your hard work. Just don’t make a habit of it or you’ll blow your plan to save.
3) Automate Your Savings
Here’s a way to set it and forget it. Once you have your budget planned and determine a starting point of how much to save, automate it. It’s easy to either forget to set aside savings, or be tempted to spend it instead. By automating a certain amount each month, you’re assured your savings goal is being met. Then you don’t have to worry about it. If you have a job that has a 401k Savings Plan available, take advantage of it. Ask your employer if they contribute matching funds. This means, once you put a certain amount in, your employer will contribute that same amount. Basically, this adds up to free money and doubles your savings with interest. If you don’t have an employment situation that offers this, there are other options available. If you need assistance, seek the advice of a financial planner.
4) Don’t Use Your Credit Cards
Even if you have low or interest free cards, it’s easy to max them out quickly. The rule of thumb here is, don’t spend what you don’t have. It’s good to have credit cards in case of an emergency, but it’s better not to use them if possible. This also can help your credit score by having a low debt to credit ratio. That’s one of the factors in determining your score. Experts advise to use your debit card for purchases instead. This will help reign in spending and most likely avoid unnecessary purchases because you can’t spend what you don’t have. It’s a good idea to use your bank’s phone app to access your account to keep tabs on your balance. Then, you can be certain you don’t end up overdrawn and incur the fees associated with that.