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We all have good intentions when it comes to managing our money. We’re doing our best to stay above water and we often make promises to ourselves that we’ll save money once we reach a certain milestone i.e. get a raise, become a certain age, win the lottery, etc.
But, those times may come, but you won’t automatically go from a spender to saver. Saving money starts with your mindset and your money habits. You must make the decision to place your future needs above your current wants. It requires planning and discipline.
According to Bankrate, 1 in 5 Americans are not putting any money towards saving for short-term goals, for emergencies, or for retirement. We live a very consumerist society and there’s great pressure to spend, which has been amplified by things like social media.
Instant gratification makes it hard to delay purchasing the latest smartphone or your dream vacation. Once your wants consume your paycheck, you’re more than likely to end up further in debt, which then turns into more monthly payments that control your paycheck and your life.
Whether you’re barely staying afloat because your income is barely covering your expenses or if you’re not budgeting at all and are spending your money mindlessly, below are 10 habits you can adopt today to make saving money a priority regardless of how much money you make.
10 Practical Ways to Save Money
The first step to winning with money is knowing exactly where your money is going.
To be successful, you must track your expenses. Every dollar. Every dime. Every penny. Whenever you spend money, you must record it whether that’s $0.50 at the vending machine or $200 at the grocery store.
It would be great if we all have an infinite amount of money so that our bank accounts and wallets never go empty, but that’s not the case. Tracking your expenses helps ensure that you’re not over-drafting your account or overspending in one particular area.
You can track your expenses using a variety of methods, including pen and paper, the cash envelope method, an app, or an excel spreadsheet. Be sure to use a method that you’re comfortable with so that you can make this a habit, not a one-off thing.
Set savings goals
The reason why most people fail at saving money is that they aren’t saving with a purpose. Just think about all the times you’ve added money to your savings account and then transferred it back to your checking account a few days later.
Once you set intentional savings goals, you’ll determine just why you don’t have any money saved. It could be that the timeline was unrealistic or your plan was way too vague. You’ll know exactly what you’re saving for, how much you need to save and be more likely to let that money be until you need to use it for it’s intended purpose.
Create a spending plan
Creating a spending plan for your money is a necessary step to transforming your finances. I recommend creating a zero-based budget, which is assigning a job for every dollar. This doesn’t mean that you spend every dollar earned. You’re just making a strategic plan on how you’ll spend your money until the next time you’re paid.
Truth is, people save more money when they start with a small goal because it’s more realistic. The amount you’re able to save weekly, monthly, or yearly is just a piece of the puzzle. Don’t focus so much on how much you’re able to save. Focus on being able to save.
By starting small, even if you’re saving just $5 a week, you’re creating a healthy habit. Over time, that $5 will turn into $10 and then into $50 and then into $100. Since you’ve conditioned yourself to save, you’ll be more likely to smash any savings goals that you set in the future. It’s about progress, not perfection.
Pay yourself first
You save more money when you pay yourself first before doing anything else. Once you’ve made your spending plan and know exactly just how much money you have leftover, transfer a percentage of that to savings right away. That way you won’t be tempted to spend it on anything else. If it’s out of sight it’s out of mind.
Automate your savings
Setting up automated savings is the easiest and most effective way to save money. Just like paying yourself first, if it’s out of sight, it’ll be out of your mind.
Reach out to your HR partner to have a percentage of your income go directly into another savings account. That way it never touches your checking account and you won’t be tempted to spend it on anything else. It’ll feel like the money isn’t even apart of your paycheck.
Some bank accounts also offer a round-up feature where any amount of change between the amount of a transaction and the next dollar will automatically do into savings. For example, say you bought a pack of gum for $1.59. Once you complete your purchase, $0.41 will automatically be transferred into your savings account.
Open a high-yield savings account
Don’t be afraid to use online banks. As long as the account is FDIC insured, your money is safe up to $250,000.
Transfer your emergency fund to a high-yield savings account today so you don’t miss out on earning interest on the money you’re saving. Most traditional banks only accrue about .01% interest compared to up to 2% in a high-yield account.
Fear shouldn’t keep you from putting your money to work for you. Take the time to do the research and then commit to making the switch so that you can start saving money today.
Live below your means
If you want to increase your savings, you can’t keep up with the Joneses. You have to learn how to say “No” and be more intentional with how you spend your money.
One of my favorite quotes is “If you can’t pay for it in cash, you can’t afford it.”
I bet living by this principle will transform life for you. That luxury bag purchase will become a want and not a need, that weekly brunch out with friends may turn into a rotating potluck brunch at each other’s house and that item on clearance in Target will be left right on the shelf instead of collecting dust in your house.
When you begin to live below your means, you’ll realize exactly how much money you have. A lot of us, including myself, can’t get ahead because we put ourselves farther behind by trying to keep up with what everyone is doing.
Put your blinders on and focus on your lane only. You can’t win the raise aka save money if you’re focusing on others around you.
Pay off your consumer debt
Having debt looming over our heads keeps us from reaching a lot of our financial goals. The only way to get rid of it is by creating a plan to pay it off.
Now, getting out of debt requires much more than picking a debt payoff method. Whichever method you choose, the debt snowball or the debt avalanche, the most important part is that you create a budget and make a plan that you can stick to and that works best for your situation and your financial goals.
Making the commitment to pay off debt will help you free up cash, achieve your financial goals, and even raise your credit score.
Take advantage of your retirement savings plan
Not contributing to your 401K to at least get your employer match is leaving a part of your salary on the table. You’re basically giving up free money.
Most companies match up to at least 5%. Find out whether or not your employer offers a match and sign up to contribute just enough to get it to your 401K. I promise you won’t miss the small amount coming out of your paycheck. Most of it was probably going to taxes anyway.
Plus, not only will you be getting an employer match, you’ll gain interest on your money. Compound interest is a beast.
Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.Albert Einstein
Saving money doesn’t have to be overwhelming. Just by making a few tweaks to your current spending priorities, you’ll be well on your way to saving money in no time. Being intentional and planning for your money helps you tell your money where to go so that you’re not wondering where it went. It doesn’t matter how much money you make, what matters is what you do with it.
Do you have any tips that help you save money? Share them below.