Are you having trouble saving money? You’re not alone. Almost 75 percent of Americans either have no savings or do not have enough of it to cover at least three months of living expenses. This tells you how difficult saving money can be, but it’s possible. In this article, we’ll give you some useful tips you can apply to save money.
Understand Your Finances and Learn to Budget
One of the most important tools you can use to effectively save money every month is a budget. A good budget gives you an estimate of your expenses against your total income, giving you an idea of the amount of money you can save at the end of the month. And if you stick to a good budget, you’re almost guaranteed that you’ll stop having trouble saving money.
Before you prepare a budget, you have to first understand your finances. This means understanding all your income from various sources, outgoing expenses, debts, savings contributions, monthly bills, and everything else that involves your money. For example, if you earn income from rentals, you should be able to establish that total income you get from that specific source.
Once you understand your finances, start preparations for a budget by keeping track of all your income and expenses for 30 days. At the end of the 30 days, make a comparison of all the expenses and income to find out how much you’ve been able to save – or the deficit. If your spending exceeds your income, start cutting back on variable expenses.
Eliminate Your Debt
Have you heard of the saying, “debt robs you of your income”? A large debt is a big burden on your saving plan. The sooner you eliminate debt, the better for your finances. Otherwise, you’ll still be having trouble saving money. The longer you delay paying the loan, the bigger it becomes. Get a plan that ensures you’re committed to finishing up the loan without accruing penalties or additional charges and interests.
Include your loan repayment plan in your budget. The plan should include the specific date when the repayment is due to avoid penalties for late payment. Depending on your level of income, you may be able to repay the loan in specific installments and still save some money. If you think you’ll not be able to make regular payments to offset the loan, you have the option of filing for chapter 7 bankruptcy.
Filing for bankruptcy can be a complicated process and you have to understand the legal process involved. Look for a reputable bankruptcy law firm in your city or state to find legal help with the process.
If you have several debts, use the snowball method in your repayment plan. This is a method where you pay your debts starting with the smallest to the largest.
Create a Savings Account
You have prepared a budget that includes your loan repayment plan. Now you need to create a savings account. Mixing the money designated for daily or monthly spending with what you’re supposed to save is not a good way to do it. If you’re not careful, mixing the two will see you still having trouble saving money. Therefore, create a different account specifically for saving. A separate account will minimize chances of you dipping into the savings account to cover your expenses.
Setting your savings goals will get you motivated into separating your savings and expenditure accounts. For example, do you want to buy a house in the next 10 years? With this goal, you’ll not want to mix your savings with your expenses account. Your savings goals can be short term, midterm, or long term.
Have you ever heard of the money philosophy of paying yourself first? The money you pay yourself goes into savings and ultimately into investments. You can save enough money that will allow you to start a side business as an investment, such as an online ecommerce store. When you have two separate accounts for your savings and expenditure, paying yourself first means that you should put money into your savings accounts first before the expenditure account. Any deficit in the expenditure account should be met by additional streams of income, not from the savings account.
Automate Your Savings
One of the easiest ways to stop having trouble saving money is to automate your savings. This applies to people who have predictable sources of income, such as a monthly salary. Set up an automated transfer that gets your savings account credited with the amount you set aside as savings for each month. Just like separating a savings account from your expenditure, this automation also ensures that you reduce the chances of using this money for your expenses.
Automatic transfers also mean that your savings account gets bigger each month without any extra work from you. Make things even easier by automating your bills. Automating your bills will help you avoid penalties or extra charges for late payments. Only regular monthly or annual bills can be automated, such as rent or student loan repayment.
Still on automation, you should cancel automatic subscriptions. This could be subscriptions to movie streaming apps or gym membership. If you don’t use the apps or facilities on a regular basis, you should cancel automatic subscriptions.
Increase Your Income
Your budget should tell you whether your income is enough to meet all your expenses and save enough for emergencies and investments. If your income is small, you should start thinking of ways to increase it. Take a side hustle or another job to increase your income and boost your savings.
It is easy to start a side hustle or business that aligns with your career, experience, or interests. For example, if you’re a car enthusiast or are in the auto industry, you can start a side hustle of selling used car parts. You could also take some freelance gigs in your areas of interest. The more streams of income you have, the less your chances of having trouble saving money.
You should spend the extra income you generate wisely. In addition to the side hustle, you may get additional income from work bonus, tax refund, or inheritance. There will be temptations to spend money on flashy things or for leisure activities. You can treat yourself, but make sure you spend it wisely. For example, you can use the money to pay off your balance of student loans. If you’re debt free, think of investments or savings. If possible, you should put all the money generated from your side hustles into your savings account.
Sell Unused Items
Getting a side hustle is one way of increasing your income to meet your financial goals. An additional method is selling unused items. Have an extra car that you rarely use? Sell it and pay off your debts.
You can also use the money to buy an asset or something that you or your family need. For example, you can start your journey of buying a home by finding ways that will fund the mortgage. In addition to side gigs, selling some unused items will give you enough money to meet your monthly obligations in paying for the house. Make sure you use a local title company to verify true ownership of a house before you start paying for it.
Declutter everything in your home that you no longer use. It could be the vintage chair your grandmother gave you. It’s easy to find buyers for such items on online marketplaces.
Cut Down on Some Expenses
Eliminating or cutting down on some expenses will ensure that more money goes into your savings. Track your expenses, differentiate your wants and needs, and choose specific activities or expenses that you’ll either eliminate or reduce. In addition, ensure there are no sudden increases in your expenses every month. One of the reasons why you may continue having trouble saving money is because there are some additional unexplained expenses every month.
Not every expense can be eliminated. For example, you cannot completely eliminate your rent, water, and energy bills. However, it’s possible to reduce them. For example, you can move to a cheaper house or apartment. You can lower your thermostat on your water heater to reduce your energy bills.
Additional expenses that you cannot avoid may be unplanned but have to be met. It could be a medical expense or fees for lawyers. If you’re going through a divorce process, you should prepare to pay for legal representation. If you already have an emergency fund, it can take care of some of these expenses.
We have already talked about canceling your subscriptions. This is one way of reducing expenses on activities that are not necessary. You may be paying a monthly subscription for a movie streaming app, but you’re only available on weekends to watch a movie.
You can also DIY your home projects. Take advantage of YouTube and search engines to get as much information as you need to work on the projects. You also don’t need to buy new tools or equipment for these projects. Look for used equipment for sale to save money.
One of the benefits of cutting down on expenses is that it creates an additional pool of funds that you can put to good use. Maybe you’ve not been able to save a specific amount of money each month. Eliminating expenses may make it possible to achieve your savings goals.
Be a Smart Shopper
A significant amount of your monthly expenses goes into groceries. This is one expense that you can’t avoid, but you can be strategic about how you go about it in order to save money. Have you been throwing off some food because you bought more than enough? Ensure you only buy what is enough the next time. This is especially important for perishable items. Prepare a shopping list to guide you the next time you visit your local grocery store.
Shopping smart also means taking advantage of discounts and offers in supermarkets. In addition, carry your own bag to avoid paying for one at the supermarket. You can also take advantage of online grocery delivery if it’s free. You’ll be saving on fuel and the time you’d have spent going shopping. It is also easy to find cheaper deals when shopping online.
Besides groceries, you should also get smart when shopping for other items in general. For example, if you want to buy a car, buying it at the end of a financial quarter will ensure you get a good deal. This is because many car dealers are given targets that they must meet before they can claim financial bonuses. The dealers will be keen to meet their targets at the end of these quarters and you might get a good deal.
Don’t Overspend on Payday
One of the reasons why many people continue having trouble saving money is the illusion of plenty on payday. Many people forget about the bills and expenses waiting for them. Many people spend almost half of their monthly wages within 2 days after being paid. This is what some experts might call living dangerously.
This is why you need to create a budget and stick to it. Any spending should be justified by the plans you’ve outlined in the budget. If you splurge on payday, you may not have enough money to last you the rest of the month. This means no money to save. Sometimes, you may have to seek loans to meet some of your expenses.
Watch Your Savings Grow
Following the above tips will set you on the right track and you’ll stop having trouble saving money. It might not be easy at the start, but it gets better once it becomes a habit. You should review your budget every month, check for areas that need adjustments, and make the necessary adjustments that ensure you continue saving money.
Do you want to stop having trouble saving money and enjoy financial freedom? Start by understanding your finances and creating a budget. Stick to the budget and meet all your financial obligations. That loan that is due, pay it. The fee for bankruptcy attorneys that you’ve been delaying paying, pay it. Paying off your debts and other financial obligations does not only give you peace of mind, but it also ensures that your new streams of income will go into savings.