Saving money is one of those task that’s easier said than done; we all know that it’s smart to save money in the long run, but so many of us have such a difficult time doing it. There’s more to saving money, you have to learn how to spend the money that you have.
Let’s start with learning how to Save Money Responsibly.
Step 1-Pay yourself first
Deposit a portion of your paycheck in your savings account. Over time, you will see the results of your portions adding up
- To set up an automatic deposit, talk to the payroll staff at your job (or, if your employer uses one, your third-party payroll service). If you can provide account information for a savings account separate from your basic checking account, you should generally be able to set up a direct deposit scheme with no problems.
- If for some reason you can’t set up an automatic deposit for each paycheck (like if you support yourself with freelance work or are paid mostly in cash), decide on a specific cash amount to manually deposit into a savings account each month and stick to this goal.
Step 2- Avoid accumulating new debt
Some debt is essentially unavoidable, but when you can avoid going into debt, do so. Paying a sum of money up-front is always cheaper in the long run than paying off an equivalent loan while interest accumulates over time.
- If taking out a loan is unavoidable, try to make as big of down payment as possible. The more of the cost of the purchase you can cover up front, the quicker you’ll pay off your loan and the less you’ll spend on interest.
- While everyone’s financial situation differs, most banks recommend that your debt payments should be about 10% of your pretax income, while anything under 20% is considered healthy. About 36% is seen as an “upper limit” for reasonable amounts of debt.
Step 3- Set responsible saving goals
It’s a lot easier to save if you know you have something to save for. Set yourself savings goals that are within your reach to motivate yourself to make the tough financial decisions needed to save responsibly.
Step 4- Establish a time frame fro your goals
Setting time frames is especially important for essential short-term goals when an emergency comes up and you need money but don’t have it on hands. Establishing a time frame can get you motivated as well.
Step 5- Keep a budget
Assigning a set portion of your income to all of your major expenses ahead of time can help ensure that you don’t waste money, especially if you actually divide each paycheck according to your budget as soon as you get it.
Step 6- Record your expenses
Keeping track of your expenses is key to identifying “problem’ areas to adjust your spending habits to fit your budget, so keep track of all expenses throughout the month. At the end of the month you may be shocked on the amount of money you spend.
Now let’s talk about Cutting Expenses
We tend to over pay on stuff that we don’t need, which increases the amount of money that comes out of pocket and causes us not to save. An example is eating out, ALL the time, you might just think “oh it’s just $6.35” but trust me when I tell you that those $6.35 you spend at McDonald’s, Chick-fil-A, Starbucks, or Panera adds up at the end of the month. Then your there smoke coming out your ears from you thinking so hard trying to find out where did all your money go. So learn to limit your drive-thru’s and cook at home. But if you still decided to eat out, then look for coupons, they are every where!
- Using apps like Locavore can help you get organic, fresh and cheap food.
- Another app that I personally love is ibotta which gives you cash back as you shop for groceries, and what not.
Another thing we over pay for is our utility bill. We have the opportunity to reduce those numbers so why not do it. Here are some easy tips and tricks to help you out.
- There’s no reason to leave the lights on if you’re not in the room so turning the light OFF will help you a lot.
- Unplug anything that is not being used like your phone charger, the computer/laptop, the t.v., etc. Believe it or not even if your not using these things, it’s still pulling out energy which can be one of many reason for the high utility bill that knocks at your door every month.
- Avoid using heating and A/C when it’s not essential. If your hot, try using a small hand fan or open the windows. If your cold, try a few layers of clothes/blankets.
- If you can, invest in solar panels do so solar technology is becoming with in each passing year.
- You can also use MyEnergy which gives you tips & tricks on saving on your bills, plus you can create a customized savings plan for your home.
For more tips here’s a quick video to help you find your way to wealth.
Now that you’ve educated your self with quite some information on saving money, what about a quick quiz to test your knowledge.