Knowing how to save money and putting it into practice will save you for emergencies, retirement, college, and all your big financial goals.
There are ways you can go about saving money without giving yourself a hard time. You can cut down on monthly bills, adjust your daily habits, make some personal changes in the long term, and more.
Oftentimes, the hard thing about saving money is simply starting. This guide on how to save money will help you put up an easy and realistic strategy to attain all your financial goals – short-term or long-term.
Let’s get started.
1. Take inventory of your expenses
Figuring out your expenses is the first approach to saving money for your big financial goals. It is important that you know exactly where your money goes daily, weekly, and monthly. Check out how much you spend on household items, coffee, clothing, cash tip, and others.
After curating the total figures in categories such as groceries, college, gas, and mortgage, ensure the figures tally with your bank statements and credit card and do not deliberately leave out anything.
2. Make a savings plan
Your savings plan will most likely help you do more about your savings. Consider how much you’ll be setting aside in different categories including emergencies, retirement, college, and vacation. It is important that you plan to automate the process with savings and budget apps so that you’d have to think twice to make any unprogressive change to the process.
3. Do not joke with emergency funds
You must have heard that you need an emergency fund in the ballpark for 12 to 24 weeks of your income. That may seem like a hard thing to do, but there are easy processes for making this a reality. Starting small as low as $20 every week is important to make you prepared somehow for emergencies.
These steps will help put you on track with your emergency fund.
- Draw out your income and all expenses every month.
- Set up your goal on your emergency savings. It should cover 3 to 6 months’ worth of the cost of living.
- Develop your savings plan which could include specific and measurable targets that can be of help towards your goals. Your goal may be to save an extra $1000 a period of 8 months in an emergency fund.
- Deposit your emergency fund where you can access it. Consider a liquid account. This might be a regular saving account at a credit union or bank that produces returns (no matter how small) on what you save.
- Stay focused on your savings plan. After you’ve created your plan, look for measures that can help you automate the savings without having to influence it.
4. Cut your spendings
Look for ways that can help you cut down on your spendings so that you have more money for savings and other personal goals. Find out where your money has been going but is really not necessary; cancel subscriptions that you do not use, reduce the number of times you eat out monthly, take advantage of bonuses, negotiate your purchases to save more, among others.
5. Employ the 24-hour rule
Ensure not to buy things that are too costly or are really not needed on impulse on a self-imposed 24-hour rule. If you’ll be buying anything that can be categorized as ‘unnecessary’, wait till after 24hours before making the purchase. This pattern should work for online shopping where your items can be added to your cart and paid for later.
6. Take part in a local Investment Development Account (IDA) program
If you have a low income, you may be allowed to take part in a community IDA program where your savings are matched. In return for taking part in a financial education session and planning to save for your education, business, or a home, you could earn $10 for every $10 you save, maybe a bit less or more. If you save $50 each month, you could rake in hundreds of dollars at the end of the year.
7. Get free debt management counseling
You can get free debt management counseling with a Consumer Credit Counseling Services (CCCS) counselor. The network can help you with your confidentiality and without bias, to help you figure out your options, develop a budget, and negotiate with creditors to settle the outstanding on your loans. The CCCS’ network 45-90 minute counseling sessions do not attract any charge and have no obligation.
8. Use ATMs of your bank or credit union alone
You may not have thought about the extra charges being deducted from your income every time you use ATMs of a different bank for your transaction. If each withdrawal reduces your money by $3, then you’ll have lost over $150 within 12 months.
9. Get free entertainment at a library
You can save over your spending on entertainment by visiting a library on regular occasions. Libraries offer users free e-books, audiobooks, courses, and even to borrow things like sewing machines and other work tools.
10. Meal prep
Meal prepping involves preparing a complete meal or dish ahead of schedule. It is basically common with people who get very busy as it helps them save time in the kitchen. The good thing is that since you’ll be planning your meal ahead, you’ll be making more nutritious meal choices over the long term.
Plan and stick to a list while at the grocery store. It has been discovered that people who shop with a list and buy little spend less than people who get to the grocery store before deciding what to buy. You could easily save yourself a few hundreds of dollars by sticking to this decision.
11. Try doubling your recipe to save money and time
Double the recipe the next time you are planning your family dinner and keep the leftovers in a fridge for another day. This method will help you save money on ingredients as you’d be using fewer ingredients for two meals with less likelihood of any waste.
12. Refinance your mortgage
If you have the option of refinancing your mortgage for a reduced interest rate, then make good use of it. You could save well over $5,000 in interest charges on a 15-year $100,000 fixed-rate mortgage when the interest rate is cut down from 7% to 6.5%. You’ll also accumulate home equity quickly.
13. Turn to a coupon Don
If you are smart with coupons, you could save a lot of cash. Get tactical with couponing, even for essential household items like cleaning supplies and toilet paper. So, if you have a store coupon for $5 off a $20 purchase, first of all, make use of that coupon. If not, your other coupons might negate the $5 coupon, and discount the total sales amount to less than $20.
14. Plan ahead and take extra effort for low airfares
Do more search on your airfares if you are planning a dream vacation. Check multiple websites for other airline search engines for inexpensive fares. There are discount carriers that do not enlist their flights in third-party searches, so you may just want to consider checking their websites for direct information on their rates.
15. Go natural
Consider natural and home DIY ideas for your everyday needs. You can do minor designs on your shirt for a new look, make your laundry detergent, body sprays, and more with guides available for free on YouTube. You’ll be amazed at what you’ll come up with and even save on your daily spending.
16. Look at reducing the temperature on your water heater
Reduce your water heater temperature to 120 degrees to save about 60 percent on the cost of water heating. Every 10-degree reduction in temperature approximately saves you 5% on the water-heating cost.
17. Slow down on buying new clothes
A new pair of jeans here and a new top there may seem negligible, but they can quickly make up a huge figure over time. If you have loans you are paying off and want to save more to achieve that goal, then slow down or stop buying new clothes for now.
You must be serious and honest about your financial goals for you to attain them. One of the good things about this kind of decision is that it will help you to be more conscious about the way you handle and store your stuff and the way you spend it. You may want to start with just one month or a quarter and then move up from there as you adjust to your new decision.
18. Start a side hustle
If you want to earn more money so that you can save more money, then it may be time to increase your stream of income to make room for more income.
Having a side hustle doesn’t mean that you have to do another job and get every hour of your day fixed. You could simply create online weekend classes on a particular skill or language you can teach very well. You could also blog, create an ebook, do content marketing on Fiverr, sell items in your home that have been lying unused for a long time, and think of other ways to make money on the side.
The focus of having this side hustle isn’t to increase your spending, but your savings, with more money going into clearing your debts. So, do not get distracted by your financial goals!