When was the last time you made a cash deposit to your account? If it was years ago then you need to learn how to budget. Saving money requires commitment and unfortunately, not a lot of people are willing to make that commitment. The concept of saving is pretty straightforward but statistics show 1 in every 5 Americans doesn’t have money in the bank. Why do you think so? It’s simple, they don’t view saving as a priority. Either that or they don’t know how to save. The first step in saving money is to become more aware of your finances. Sure, you know how much money you’re making but the real question is, how much are you spending from that money? Check your spending habits, check your budget, check your lifestyle but above all you should incorporate money-saving tips into your life. The sacrifice you are making now will eventually pay off in the future. The hardest part is getting used to saving but if you turn it into a habit, it will feel natural to you.
When saving money, it’s smart to combine short term and long term strategies. Short term like dining at home instead of going out in a restaurant and long term like clearing all your debts. Although you probably won’t get it on your first try, consistency will bring you success. If you’re planning to make a New Year’s resolution, saving should be included. Here’s how you can get started.
Start By Making A Budget
You have to start somewhere and when it comes to saving, it all starts with setting up a budget. A budget will show you how much money you have and where you’re spending your money. We suggest you start with the 50-20-30 rule when making your budget. In this rule, you can spend 50% of your income on essentials like food and paying for your rent, 20% will go to savings and then 30% goes directly to personal consumption. Start by categorizing your expenses so you’ll know how much money you’ll shell out for every category.
Save your Money Automatically
The problem with manual saving is there’s a big chance you’ll be tempted to spend that money. Trust us, we’ve seen so many people who failed at saving all because they didn’t save money automatically. How are you going to do that? Deposit a certain percentage of your paycheck directly to your savings account before you start with the expenses. In that way, you won’t be tempted to use your money intended for saving.
Have An Emergency Fund
Not a lot of people know what an emergency fund is all about and the only time they get to appreciate it is if they are in the middle of a crisis. An emergency fund is setting up living expenses of at least 6 months just in case you get fired from your job or you have to pay for an unexpected medical fee.
Check Your Spending
The ice cream you bought at the café, the 2 lattes you added because you were feeling extra groggy that day and you needed caffeine to perk you up, the extra gallon of milk at the grocery because you wanted to try a different flavor – all these can add up. We’re not saying deprive yourself of the things you love but we’re saying try to track down your expenses and see where exactly your money is going. Make a list may it be on a notebook or in your phone so you’ll get an idea of where you’re spending your money and try to see if you can cut back on those expenses.
Everything starts with a plan. If you don’t have a plan, there’s a big chance you will never be able to save money. With these helpful and doable tips, we’re sure you’ll be able to grow your savings the next year.