Whether it’s buying a new car, building a new house, or planning for retirement, these actions all have one thing in common. They require you to save money!
While it may not be easy, it’s also not as hard as you think. You don’t need a master’s degree, accountant training, anything else to save money.
In fact, all you need is some determination, a few basic apps, and some handy tips! Keep reading, and we’ll teach you 10 of those tips on how to save money.
Learning How To Save Money Can Be Easy
As much as you would like, saving money isn’t something that comes naturally. It is a habit, and just like any habit, it’s something you have to learn.
That doesn’t mean it has to be hard. All you need is a little discipline, some dedication, and a good idea of where to start. Once you know how to save money, it’s a habit that becomes automatic.
Track Your Spending
Before you can figure out how to save money in your budget, you have to know where your money is going.
This means you’ll have to keep an accurate record of everything, from your rent and utilities to your groceries and tiny indulgences. Make sure this includes all forms of payments, including cash, debit card, or credit card.
Do this for a month, and you’ll have a good idea of exactly where your money is going. It is best to do this for at least three months, so you can get an accurate picture of your average total spending every month. This will help you when you create your budget.
Also, make sure you don’t forget to include all of your income in your tracking as well. You can’t save money if you’re spending more than you’re making!
Evaluate Your Needs
Once you know where your money is going, it’s time to figure out how much of that spending is essential.
Rent, utilities, food, transportation, and anything work or school-related should be part of this list. Loans, credit cards, and anything else debt-related should also be included.
Everything else you’ve spent money on will have to be decided on a case-by-case basis, depending on what your monthly budget is and any savings goals you create later. Part of knowing how to save money is learning what you should be spending it on.
Create A Budget
Now that you know how much money you have and what it’s been doing, it’s time to decide what it should be doing for you.
Creating a budget for yourself can actually help you save money in several ways. First, by sticking to a budget, you’re learning discipline, which is a vital step in learning how to save money.
Second, you’re ensuring that you have enough income to actually cover your living essentials. If you don’t, this step can help you decide if it’s time for to ask for a raise, find a new career, or add some side gigs in your spare time.
Third, making a budget can help make sure that your bills are paid on time. This will help reduce, or eliminate late fees, penalties, and interest you’d end up paying otherwise. This also helps your credit score, which will also help save you money in the long run.
Set Realistic Goals
If you want to teach yourself how to save money, you have to set goals to work towards. These goals have to be realistic and tangible.
One example would be to save a down payment on a new home. You’d figure out how much you can afford to spend, then decide how much of a down payment you’ll need. From there, you can decide when you want to have that money saved by. This will enable you to figure out how much you’ll need to save a month to reach that goal, and adjust the timeline according to your income.
If you’re not sure where to begin or have a tangible goal in mind yet, you can start by creating an emergency fund, if you don’t already have one. This is a great way to teach yourself how to save money towards any given goal. It’s also helpful financially to have a few month’s of living expenses, in case something happens.
Make Your Savings Automated
By now, you’ve figured out what you want or can afford, to save every month. You may still be finding the actual process of saving that money hard, however, and that’s fine. Any habit takes a while to form, and it may take a few months to get better about putting that money away.
Thanks to today’s technology though, you’ve got an advantage on your side. There’s an app for that! There are many ways you can make your savings automatic now. You can set up transfers between bank accounts, split your direct deposits so it happens before you even see the money, or find a budgeting app that does the work for you.
One fun way to do this is to use an app like Acorns. It makes your savings automatic by rounding up the totals on your transactions and pulling out the spare change for savings. It then takes the next step and invests that change for you, which also helps you grow the money you’re saving.
Apps like this can teach you how to save money the smart way, and make it fun at the same time.
Work On Your Debt
Having high debt is one of the easiest ways to spend too much money that there is. The more debt you have, the more interest you end up paying in the long run.
Over time, it’s entirely possible that you’ll end up paying more in interest than the loan was ever worth, depending on what your rate is and what kind of debt it is. Even if you only owe $5,000 in debt, you can still easily rack up that same amount of interest if you take too long to pay it off. What could you do with a spare $5,000?
Depending on how much you actually owe in debt, you’ll have to decide if you want to put it first or split it with whatever savings goal you’ve set. Either way, paying off your debt as quickly as possible can save you thousands in the long run, and give you peace of mind as well.
The important thing to remember about learning how to save money properly is that life is always changing.
Fluctuating bills, sudden expenses, and changes to your income can all affect your budget and savings plan, and change things drastically in the blink of an eye.
That’s why it’s important to make sure you’re frequently evaluating your finances, and adjusting your budget and savings plans accordingly.
Trim Your Bills
Knowing how to save money efficiently doesn’t just start after all the bills are paid.
Even if you can easily pay all of your monthly living expenses, that doesn’t mean you should be paying more than you should for things that you don’t want, need, or use.
By combing through your bills and finding places that you can trim, renegotiate, or cut altogether, you’re freeing up more money that can go into your savings fund.
Reducing your monthly expenses can also be a boon if your income lowers for some reason, or you find yourself constantly stressed trying to meet your bills.
Find Cheaper Alternatives
Teaching yourself how to save money doesn’t mean that you have to cut out things that you love, or treat yourself with.
Bringing your own lunch or snacks from home, finding a cheaper coffee shop, or even making your own tasty coffee drinks at home are great examples of this. Carpooling, riding a bike, taking public transportation, or even walking to your destinations is also a great way to save money on fuel consumption.
Finding cheaper ways to do things will not only boost your saving power, but it will also make you feel like a boss in the long run.
Learn When To Say No
Discipline is probably one of the hardest parts of learning how to save money, but it’s the glue that holds everything together. It doesn’t matter how many budgets you make or goals you set, you’ll never reach them if you don’t discipline yourself.
This means saying no to things you’d otherwise be tempted to spend money on, no matter how much you want them. You may
Spending time out with friends or family is another place you’ll want to practice financial discipline. While it might be tempting to have lunch with your besties or drinks after work, you’ll want to keep this to a minimum.
If you can’t say no, or you really want to spend time with them, try suggesting cheaper, or even free, alternatives. Your budget will thank you, and you’ll still have a great time.
Don’t Forget To Reward Yourself
One big myth about learning how to save money is that you can’t ever treat yourself, and this simply isn’t true. In fact, it’s an essential component for savings success.
If you’re constantly denying yourself, then saving money will start to feel like a chore or burden. Alternately, if you don’t reward yourself for reaching goals, you’ll soon find you have no incentive to keep going.
The trick is to find a good balance between the two and to keep the rewards on the small side. If you blow the entire stash you’ve saved on your treat, then you’ve defeated the whole purpose, to begin with!
If you’ve found any of these tips useful, or know of any we’ve missed, please feel free to share in the comments below!