The most difficult thing about starting to save money is getting started. Saving money can be hard; no doubt about that. Aries Jimenez; Financial Life Planner, says, “being a money saver as opposed to a money spender is a mindset that may not be natural to most people, however, it can be developed through practice”. This means that it’s possible to grow this habit. In the long run, when you have eventually overcome the problem of starting, it starts to pay you.
It’s hard to find easier ways to save money and even more difficult when you’re trying to figure out how to use this savings to meet your financial goals. That’s why I’ve decided to write this article to show you a step-by-step guide to money-saving habits that can help you develop a realistic savings plan. Not to worry, they’re simply easy to follow tips.
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1. Use a Budget
Doing this on a weekly or even monthly basis is a good way to start. All you need to have is an idea of what you spend money on either weekly or monthly depending on how long you’ve decided to create the budget for. Keep track of all your expenses – that means every coffee, newspaper, and snacks you buy. Ideally, you can account for every penny. Once you have your data, organize the numbers by categories, such as gas, groceries, and mortgage, and total each amount.
Consider using your credit card or bank statements to help you with this. If you bank online, you may be able to filter your statements to easily break down your spending. Once you have an idea, you can begin to organize your recorded expenses into a workable budget. This budget should reveal every detail about how your expenses measure up to your income so as to limit overspending.
2. Pay your Savings First
Now that you’ve created a budget, you’re all set to go. Next thing to do is to create a savings category within this budget. Start by putting away 10% to 15% of your income as savings. This percentage is relatively small so if you find it hard to save that much, then you should cut back expenses. To do so, note the non-essentials that you can spend less on, such as entertainment and dining out then cut back expenses on them.
3. Don’t Just Spend Less, Save
There’s a difference between saving money and saving money for your future. So don’t just spend less, put the money you save into a savings account. This money can be used to plan for college expenses, retirement, or emergencies that can leave you financially better off. Only a few people get rich through their wages alone. It’s the miracle of compound interest or earning interest on your interest over many years that builds wealth. Start now. Don’t procrastinate. Later on in the future, you’ll be happy you did.
4. Create a Savings Goal
So you’ve decided to save 10% to 15% of your income, make this a short-term savings goals. Set aside this percentage either weekly or monthly rather than making it a longer-term savings goal. After, you can re-assess yourself. Check your progress every three months to see if you’re doing okay or not. This will help you stay committed to your savings plan. These simple ways to save money may even inspire you to save more and hit your goals faster. People save more successfully when they keep short-term goals in sight.
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5. Save for a Purpose
What would I like to save for? This is a great way to save money. It strengthens the drive to save. Perhaps you’d like to save to make a down payment for a house or even for a vacation, a sense of purpose makes saving meaningful.
If your goal is to put aside enough money for your retirement or your kid’s schooling, then you should consider putting the money into an investment account.
6. Don’t do it Alone
It can be very difficult if you’re trying to do it all by yourself. There are tools out there available for use depending on the savings goal range you’ve decided to set for yourself.
If you’re saving for short-term goals, consider using these deposit accounts:
- Regular savings account.
- High-yield savings account, which often has a higher interest rate than a regular savings account.
- Certificate of deposit (CD), which locks in your money at a specific interest rate for a specific period of time.
For long-term goals:
Consider securities such as stocks or mutual funds. These investment products are available through investment accounts with a broker-dealer. Remember that securities, such as stocks and mutual funds, are not insured by the FDIC, are not deposits or other obligations of a bank and are not guaranteed by a bank, and are subject to investment risks, including the possible loss of principal investment.
7. Set your Priorities Straight
Be sure to remember long-term goals. It’s important that planning for retirement doesn’t take a back seat to shorter-term needs. Setting priorities will help you get started with savings. If for example, you say you’re going to need a new car in the next few months, gradually, you can start putting some money aside for it starting now.
8. Create a family spending limit on gifts
Here’s another way to save money that works. Make this plan with your family. Decide to place a limit on how much you all can spend on a gift and how many of these gifts you all can buy at a time. Setting this limit will help you reduce expenses greatly.
Finding a way to start saving money so that unexpected expenses aren’t so devastating may not be easy. But shifting your thought patterns can yield long-term results. That’s all to it; 8 (eight) ways to save money. See, I told you the steps are easy to follow. Now let’s be truthful, was this helpful at all? Let’s discuss it in the comments. Want to talk to me privately, go here. I would be happy to help you out!