Posted on September 23 2020
According to Susannah Snider, Senior Editor of Personal Finance at US News & World Report, "The majority of Americans would struggle to scrounge up $1,000 in an emergency - don't be one of them."
Saving money can be difficult, especially if you are on a budget. However, there are some simple steps to review your expenses and see what changes you can make to start saving more money. This article shares basic tips to get you started on your money saving journey.
Analyze Your Situation
You can't make any effective decisions with your finances unless you first take stock of your financial situation. If you haven't yet been tracking your expenses and recording banking transactions, you should definitely start doing that. Forgetting to accurately record receipts for all your expenses can lead to inaccurate accounting and insufficient fund fees.
Review Your BudgetAccording to Michael Ansaldo from PC World in his article, The Best Budgeting Apps for Tracking and Planning Your Personal Finances, "If you're new to budgeting, it's helpful to use a budgeting app to help you get started." He recommends you check out reviews on budgeting apps in the Google Play Store or Apple Store.
Identify all your expenses for the month, even if you have to estimate some miscellaneous expenditures like coffee runs and eating out. Consider the following expense items that may be in your monthly budget:
- Rent or Mortgage
- Car Payments
- Gym Memberships
- Credit Card Payments
- Subscription Services
- Gifts and Hobbies
- Car/Home/Renters Insurance
- Medical and Dental Insurance
- Miscellaneous Expenses
Once you add your expenses into the respective categories in your budget worksheet, you can ascertain whether the expenses exceed your income. If that happens, you need to start cutting some of the expenses you have so you can meet all your monthly expenses and begin to save money to achieve all your future financial goals.
Cut Unnecessary ExpensesThis will be the most difficult part of the process towards saving more money. You may have to cut out some of those lattes or eating out expenses each week. Maybe you'll have to cut some of your subscription services like your favorite online magazine or streaming service.
However, cutting expenses is a great way to save money. According to John Csiszar in his Yahoo! Finance article, Cutting Out These 25 Expenses Will Save You $16,142.08 a Year, "When it comes to living expenses, most Americans subsist on a very thin margin. Fifty-nine percent are living paycheck to paycheck."
If you find yourself in that situation, consider cutting some of the following expenses from your budget:
- Bank Fees - Even if you need to switch banks, you can find checking and savings accounts that don't charge any monthly fees for balance amounts etc.
- Eating Out - Start out with the habit of cooking at home at least twice a week, if you eat out often, and slowly build up to three or four times a week. Or find time to meal prep a few easy dinners for the week.
- Water Consumption - Purchase stainless steel or plastic water bottles which you can bring with you each day, so you don't have the expense of buying bottled water at the grocery store each week or month.
- Cut the Cord - Cancel cable. Get a less expensive online streaming service.
- No More Games - Cancel monthly subscriptions to games on your phone.
- Personal Care - Cut out trips to the salon for manicures and pedicures.
- Credit Consolidation - Consolidate credit cards for one monthly payment. Work with a credit counseling firm to get your monthly payments and interest lowered. Try to double up on payments or save up to pay off the credit card so you don't have the high monthly interest charges.
Stop making purchases with your credit card. Either cut them up or put them away in a sealed envelope. Once you have paid off your credit cards, consider only using them for expenses like vacations. Make sure to pay the bill in full each month so you don't get back into debt. This can help you become more financially secure and enhance your saving ability.
Set Achievable GoalsYou need to set goals you know you can achieve. If you set goals that are too high--and fail to save that specific amount of money--you'll likely feel defeated and won't continue to try to save.
Focus on creating goals with the following three factors in mind:
- Immediate Future - These goals encompass the next 6 months. You should consider saving $1500-$5000 for an emergency fund for at least 1-2 months.
- Short-Term Future - These goals include the next 2 years. Consider saving for a vacation, paying off a credit card, or starting a new hobby.
- Long-Term Future - These goals involve the next 5-10 years. You should be saving for future things like a down payment on a new home or car. Maybe you'll want to start investing in your child's future education or your retirement fund.
These three set time periods will vary depending on your current financial situation and where you see yourself in the future. Remember that you should also be adding to your savings account above and beyond those goals--for your rainy-day fund or those unexpected expenses that come up.
You'll likely want to speak to the investment manager at your bank regarding the best savings accounts, and investment accounts like an IRA. As you begin to achieve these smaller goals, you'll start to form positive saving habits that will enable you to embark on higher savings goals.
Start Saving More Money Today
You can make positive changes in your financial situation if you take the time to review your current situation and identify the necessary changes to make. By changing your spending habits, you can start saving more money today--even when you're on a budget.
Read more articles about money-saving tips and budgeting ideas: