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.
5) Sleep on It
If you find you’re enticed to buy something, take a step back and wait. Oftentimes, we get caught up in the moment of the excitement of something new. Follow the 24-Hour rule and wait. If you shop online, leave the purchase in your shopping cart, and don’t finalize the purchase. If you’re at a store, leave the item and the store. Oftentimes, waiting for that impulse buy moment to pass can save on unnecessary purchases. This, in turn, can save you money. If you wait until you are out of that initial rush of adrenaline, you may view the purchase in a different way. You may find that you don’t actually need it. From there, take the money you would have spent on the item and sock it away in your savings account. Don’t have a savings account? Continue reading…
6) Open a Savings Account!
If you only have a checking account, with most likely a debit card linked to it, it’s time to open a savings account. It’s easy to whip out that debit card on impulse, but difficult to put the money back. If you keep your savings separate, and don’t connect it to your checking account, you won’t be tempted to spend as much. Don’t be overwhelmed at the prospect of saving money. Start small and work your way up. If you do it incrementally, you’ll adjust to having less in your pocket more easily. Once you get in the habit, it will become routine just like anything else you do regularly. Before you know it, you’ll be in the mode of saving and have some peace of mind that you have something for a rainy day or unexpected event.
7) Set a Monthly Allowance
Having a budget doesn’t mean you need to eliminate having fun. It just means you need to have a reasonable sense of proportion about it. After all, life is not just about working and paying bills. Life is meant to be lived and enjoyed. You will most likely enjoy it better if you have the security of a savings plan, along with your leisure and entertainment. So, as part of your budget, plan a certain amount to be spent on fun. Just be sure not to go overboard. If you have plans for something a bit out of the ordinary and more expensive, such as pricey concert tickets, take a certain amount from each monthly allowance and allocate a portion towards it. This way you won’t be dipping into your savings or using your credit card, and can still go to that show you’ve been hankering to see.
8) Shop Smart
With today’s technology, it’s easy to save money and still make the purchases you ordinarily would. Shopping sales is the way to get the same items for less, and therefore add more to your savings. Supermarkets are a perfect example. They have weekly sales on many items and, if you shop the sale items, you’ll see a significant savings. In fact, they usually show you how much at the bottom of your receipt. Seeing that dollar amount in print is certainly inspiring. Take it a step further, and add the savings amount at the bottom of your receipt directly into your savings account. This will be like giving yourself a bonus. Every little bit adds up faster than you may think. You may be surprised how easy this one simple step adds to your savings.