You know the benefits of savings: simple ways to start saving money
Savings protect you from emergencies…
…savings allow you to go on your dream vacation…
…savings let you buy your dream laptop, dream car, dream house…
…savings prepare you for retirement…
…savings give you financial freedom…
…savings, savings, SAVINGS!
But do you know how to save? Or are you the 1 in every 5 Americans that never learned this invaluable life skill?
If yes, you’ve come to the right place.
I’m not going to tell you why you need to save – you already know that. Instead, I’m going to give you 5 simple ways to get started.
These aren’t your complicated, advanced methods either – I’m not going to tell you how to implement the numbers behind a successful budget plan, or teach you how to refinance your mortgage.
They’re painless tricks that everyone can start doing right now – not next month, not next week, not next Monday– but TODAY!
Ready to start saving? Let’s go. simple ways to start saving money
The 5 Simple Ways to Start Saving Money
Here are 5 easy ways you can start building up savings.
Trick #1 – Record Your Spendings
Two weeks into your paycheck, your water bill arrives. $40, not bad – not something you should have a problem with… right? You take your wallet, open it up, and it hits you…WHERE HAS ALL YOUR MONEY GONE?
Okay, maybe you do always have enough for your bills (that’s great!). But have you ever had that feeling that the rest of your money somehow vanished?
Sorry to burst your bubble, but money does not disappear. You spend it.
Where? simple ways to start saving money
I don’t know… do you?
This brings us to our first trick: record your spendings.
Every time money leaves your wallet, write that down. Put it on a notepad, your phone, your laptop, anything! You should have a record of every cent you spend.
So you can’t blame your money for disappearing ever again. No, this time, the blame will be on you.
You’ll know exactly where you are putting your money. You’ll see how much you spend on necessities, and how much you spend on leisure.
What I like to do is jot down everything on my phone the moment I pay, then compile all my expenses on excel at the end of the day.
Trust me, after a week of doing this, you’ll be shocked. You’ll be shocked by the percentage that you spend on things you don’t need.
Now that you have all this data, what should you do with it?
From here, you can cut unnecessary expenses (more on this in just a bit) and adjust your spending. You could even use this to build your 50-30-20 budget plan. simple ways to start saving money
But Woah! We said simple, didn’t we? There are proven ways to build an effective budget, but that’s a topic for another article.
Yes, this trick will prompt you do to more (it’ll trick you to dig deeper!). But even if you don’t go any further, recording your expenses will help you save.
Keeping this record will make you more responsible for where your money goes. Plus, you’ll feel a pang of guilt whenever you overspend.
And if this trick gets you to start serious budgeting? That’s a BIG bonus!
Trick #2 – Pay Your Debt FIRST
Most people have two financial goals: spend less and save more.
While it’s great to have your mind set on those, you’re missing one crucial factor…
Want to know the secret of saving?
Pay your debt FIRST.
Before you think about how much to save a month to get your dream car, plan how to get rid of your debt first.
Because debt kills your finances.
According to Debt.org, the average American under the age of 35 is $67,400 in debt. That’s not only from student loans – 20% actually comes from credit cards.
How did it get this bad?
It’s simple… people didn’t pay off their debt first.
They bought gadgets, entertained themselves, traveled – maybe even loaned more money for a car or a house. They did all of these without paying their debt first. simple ways to start saving money
The result? Insurmountable debt.
This will not only plague their finances for years to come, but they’re also going to have a nightmare trying to save. The higher their debt, the higher their interest – they’re trapped in an infinite loop of payments. Every paycheck will go to their ever-increasing debt unless they do something drastic about it.
Now… do you want to end up like them?
Pay your debt FIRST!
Trick #3 – Stop Your Impulse Buying
What did we learn from the coronavirus outbreak?
We don’t need non-essentials.
Yet now that restrictions are easing, people are going straight back to their old spending habits.
Don’t waste this opportunity.
Now that you know how much you spend on non-essentials (thanks to your spending record), it’s now time to cut them off.
Do you really need that new sweater? That premium steak? Those designer shoes?
By “really” I mean, will you die without them?
No… no you won’t.
Don’t get me wrong. There is a place for treating yourself. But if you do this EVERY DAY, don’t expect to save anything.
What about impulse buyers? They get so attracted to something, they feel as if their whole world will fall apart if they don’t have it now.
This happens to us more often then we realize – or care to admit. Studies show that 5 in 6 Americans buy impulsively from time to time. So unless you’re in an ultra-disciplined league of your own, I bet you’ve done this a few times – maybe a lot of times.
And it kills your finances. simple ways to start saving money
Not as much as debt does, but impulse buying hurts your finances more than you notice.
The good news is that there is a simple trick to deal with this… wait.
Wait for the urge to buy to fade. The longer you wait, the less you feel like you “need” that item now. Eventually, you’ll be thinking, “Hey! The world’s not going to end without this after all.”
So go home, get on with your life, and after 24 hours, reconsider. Do you still “need” that item?
If no, congratulations! You just stopped yourself from buying something unnecessary and, most likely, expensive. If yes, then go buy that item! Maybe you do really need it after all.
But what if you’re hit with this: SALE! 50% OFF TODAY ONLY!
Now you can’t go home and reconsider or you’ll lose this opportunity.
Here’s the trick:
Ask yourself, “If this wasn’t on sale, would I buy it?”
If yes, then grab that deal! Chasing sales is another trick for saving money (be careful not to get carried away!).
If not, leave that item alone. I don’t care how good of a deal it is. If it isn’t worth it at the full price, it won’t be worth it at a discount.
Trick #4 – Protect Your Assets
Isn’t that a technical business term? I thought we were talking simple tricks?
Well, yes. But I don’t mean it that way. All I mean is you should protect your “assets” – your valuables.
To protect these, you need to spend for them.
Yes, spend. simple ways to start saving money
It sounds counter-intuitive, but to save, you need to spend for your house, spend for your car, spend for your laptop… spend for any high-value item you have.
Spend for their maintenance.
You might think that you’re saving money by not calling in pest control services, not hiring a professional mechanic, or not taking your laptop to a certified technician.
Instead, you’re setting yourself up for costly repairs, expensive overhauls, and overpriced replacements.
The worst part?
It’s very difficult to predict when you’ll need these. They can hit you at any time, like mini-emergencies that cost a lot.
So take care of your items! Set money aside for their maintenance. You’ll never have to experience the painful prices of repair if you do things right.
And don’t forget your biggest asset – yourself.
A single trip to the ER can be detrimental to your finances.
Take care of yourself – your wallet will thank you.
Trick #5 – Use Your Tools
Setting money aside. That’s all there is to saving.
But for some, this is painful to do.
We work hard for our money. That’s why it’s always going to be difficult to separate a portion and hide it away. We want to enjoy our rewards now, not sometime far into the future.
You’d need tremendous self-control to physically separate your savings from paycheck to paycheck. And if you keep it somewhere within reach, imagine the temptation! How tempting it would be to “withdraw” a few dollars every once in a while.
You could face all that, or, you can use your tools.
Almost every bank offers automatic transfers from your checking to your savings account. You set when, how much, and where to transfer your money, then your bank does the rest.
It hurts a lot less when everything is automated… when you don’t even have to think about setting money aside.
Want to get into investing?
There are dozens of other budget tools at your fingertips. Utilize these, they’ll make saving a lot simpler.
What’s the hardest part of saving?
It’s not doing things consistently…
…it’s not the temptation to withdraw your funds early…
…it’s certainly not reaping the rewards after a few years.
It’s getting started. simple ways to start saving money
Too many people never get past this stage. They give it a try, don’t know what they’re doing, then quit.
But with these 5 simple tricks, you have everything you need to start saving now and enjoy the good life waiting for you.